The S&P 500 contains many tech stocks that could suit an ISA or a Self-Invested Personal Pension (SIP). Options range from Big Tech giants to smaller chip businesses, and plenty of names have significant potential.
One stock that stands out is Amazon, which has recently seen heavy buying from a number of big-name, mega-wealthy investors.
Each quarter, I review 13F filings. These are US regulatory filings that large investment firms owning US stocks must submit to the Securities and Exchange Commission (SEC). They reveal the firms' buying and selling activity from the previous quarter, as well as their US stock holdings at the end of that period.
Going through the latest batch, one thing jumped out: very wealthy investors have been buying Amazon (NASDAQ: AMZN). Stanley Druckenmiller increased his position in Amazon more than tenfold in Q2, making it his sixth-largest US holding. David Tepper boosted his position by 16% over the quarter, and it became his top holding at 16% of his US portfolio. Peter Thiel purchased 495,000 shares in Q2, and it became his largest holding at 28% of his US portfolio.
These may not be household names, but all three are highly successful investors. Tepper is widely regarded as one of the greatest distress-debt and macro investors of his generation, known for high-conviction, concentrated bets. He famously bought heavily discounted bank shares during the 2008/2009 financial crisis. Druckenmiller managed George Soros's Quantum Fund in the 1990s, where he helped "break the Bank of England" by shorting the pound. He later ran Duquesne Capital for three decades, generating annualised returns of over 30% without a single losing year. Thiel, who co-founded PayPal and Palantir, was the first outside investor in Facebook. Today he focuses on disruptive technologies and market-dominating monopolies.
All three are billionaires, and billionaires often make high-conviction bets where they see favourable risk/reward propositions.
So is Amazon worth a look? The company is one of the most dominant tech businesses globally, operating across e-commerce, cloud computing, AI, chips, self-driving cars, and space. It expects to generate around $830bn in revenue this year. Yet the stock is not expensive. Based on this year's earnings forecasts, its price-to-earnings (P/E) ratio is only 21. At that multiple, I believe the stock can deliver attractive returns in the years ahead. There's a strong chance it will beat the market over the medium to long term.
Of course, it may not. Risks include a downturn in consumer spending and a drop in enterprise AI spending.
I think these billionaires are onto something with this stock. In my view, it's very much worth considering for a portfolio today.
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. The flagship newsletter, Twelfth Magpie Share Advisor, which he has run for nearly a decade, has provided thousands of paying members with top stock recommendations from the UK and US markets. Right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Amazon made the list?
Edward Sheldon owns shares in Amazon and Palantir.
The post appeared on The Twelfth Magpie.
