Last year's outsized share price performance among the "Magnificent Seven stocks" captured headlines. So it's no surprise hedge funds run by billionaires invest in many of these companies.
But the Magnificent Seven aren't the only stocks these billionaires are buying. The Motley Fool's research team analyzed the top tech holdings in 16 hedge funds run by these wealthy moguls. This insight can provide you with potential investments for your portfolio aside from the Magnificent Seven.
Let's take a look at three of these stocks owned by billionaires -- Salesforce (CRM 3.42%), Take-Two Interactive Software (TTWO 0.49%), and Snowflake (SNOW 8.57%). Here's why these three are compelling alternatives to the Magnificent Seven.
1. Salesforce
NYSE: CRM
Key Data Points
After the Magnificent Seven, Salesforce is the top tech stock owned by billionaires. The company is a giant in customer relationship management software.
Salesforce's platform meets a number of business needs around sales, marketing, and customer service functions. It also leverages artificial intelligence as a means for clients to automate mundane tasks in their operations.
Salesforce enjoyed plenty of success in its 2024 fiscal year, which ended Jan. 31. Revenue rose to $34.9 billion, up 11% from the prior year's $31.4 billion. The firm expects sales growth to continue in its fiscal 2025, forecasting revenue of about $38 billion, a 9% year-over-year increase.
Along with its strong top-line growth, Salesforce generated free cash flow (FCF) of $9.5 billion in fiscal 2024. That's an impressive 50% jump over the prior year's $6.3 billion.
The company's strong FCF led to rewarding shareholders with dividend payments this year, the first time in Salesforce's 25-year history. The company initiated a quarterly dividend of $0.40 per share.
2. Take-Two Interactive
NASDAQ: TTWO
Key Data Points
In the Motley Fool's analysis, Take-Two is the only company focused exclusively on video games that's among the top tech holdings of billionaires. One reason for this is Take-Two's portfolio of popular franchises. In the gaming industry, a hit video game can transform the fortunes of a company.
For example, Take-Two is delivering the next installment of its best-selling Grand Theft Auto series, Grand Theft Auto VI, in 2025. The last entry in the franchise, Grand Theft Auto V, released in 2013, is among the top three best-selling video games of all time.
More than a decade later, the Grand Theft Auto series continues to generate income, contributing 15.2% of Take-Two's net revenue through the first three quarters of fiscal 2024, which ended Dec. 31, 2023. And Grand Theft Auto isn't Take-Two's only popular franchise.
The company also owns beloved series Red Dead Redemption and Borderlands. The latter will see a movie released in August.
Beyond its hit franchises, Take-Two owns mobile gaming giant Zynga. This part of its business accounted for $706.7 million of the company's $1.4 billion in fiscal Q3 sales.
Take-Two plans to grow Zynga's revenue through the release of new mobile games in fiscal 2025, which began in April, and by using a blend of in-app purchases and advertising.
The consensus among Wall Street analysts is an overweight rating with a median price target of $179.27 for Take-Two stock, signaling a belief in future upside for shares.
3. Snowflake
NYSE: SNOW
Key Data Points
Snowflake is a favorite among billionaire investors thanks to the company's focus on data management services. Snowflake collects and analyzes an organization's data to deliver insights helping the business to grow.
The rise of artificial intelligence has made this data more valuable. As Snowflake's new CEO Sridhar Ramaswamy stated, "there is no AI strategy without a data strategy."
That's because AI systems require large amounts of data to execute tasks with speed and precision. Snowflake's platform can corral this data and make it easily accessible to AI software.
The demand for Snowflake's data management platform enabled the company to see strong revenue growth. For its 2024 fiscal year ended Jan. 31, Snowflake achieved $2.8 billion in sales, up 36% over the prior year's $2.1 billion.
The company expects its revenue to continue expanding. In fiscal 2025, Snowflake estimates it will reach $3.3 billion in sales.
Shares dropped after former CEO Frank Slootman announced his retirement from the role on Feb. 28. This creates a buying opportunity. The consensus among Wall Street analysts is an overweight rating with a median share price target of $210 for Snowflake stock.
Given their many appealing attributes, it's no wonder Snowflake, Take-Two, and Salesforce are popular stocks among billionaire investors. These alternatives to the Magnificent Seven can make compelling long-term investments for you, too.
