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We recently published a list of The 10 best tech stocks to buy according to Brad GerstnerIn this article, we will look at how Confluent, Inc. (NASDAQ:CFLT) compares to the other technology stocks.

Gerstner is optimistic about technology in 2024

On December 1, 2023, Brad Gerstner, CEO of Altimeter Capital, appeared in an interview on CNBC There, he explained that technology stocks are expected to outperform non-technology stocks in 2024. Over the past 10 years, earnings from technology companies have grown by nearly 16% and those from non-technology companies by 6%. 2023 was a year of recovery for the technology industry after a downturn in 2022 due to rising interest rates. The big technology companies and their operational efficiency have set them up for strong growth. While inflation and interest rates will determine what goes down, companies that have invested in advanced intelligence will experience secular growth. Gerstner believes the range between 16% and 6% will be a recurring trend in 2024.

Gerstner believes now is the right time to invest in technology

On June 11, Brad Gerstner made another appearance at CNBC and dealt with the speculations surrounding the software industry. Gerstner opined that despite headwinds, the software industry is still valuable as companies and startups are still making deals. Gerstner believes there are three main reasons for the software industry’s downward trend. He believes CEOs and CTOs are cautious about investing in software. Executives want to get a clearer picture of the AI ​​boom before making risky investments. In addition, interest rates are higher than expected due to delayed rate cuts and falling multiples. Finally, general uncertainty about the future has had a detrimental effect on the software industry’s growth. Gerstner pointed out that the software industry is trading 20% ​​below its 10-year average and thus this could be the best time to buy shares in software companies. You can also check out the best Robinhood stocks under $20.

Gerstner believes data and databases are extremely important for AI applications. He believes that companies that use data to support AI are way ahead of companies that simply automate services. The big tech companies are putting data at the heart of all their artificial intelligence applications. You can also read our article on the stocks that hedge funds are crazy about right now.

Brad Gerstner is bullish on technology, and software and AI in particular. In the first quarter of 2024, he opened six new positions and also increased his stakes in two stocks, ending the quarter with a portfolio of 13F securities worth $6.5 billion. Now let’s discuss his top stock picks in the technology space.

Our methodology

We scanned Altimeter Capital’s Q1 portfolio and selected growth stocks from the fund’s top 13F holdings. Additionally, we also added the overall hedge fund sentiment as of Q1 2024. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (More details can be found here).

Note: All price data is correct as of June 28.

A team of consultants in suits discuss the importance of stream governance for real-time data.

Confluent, Inc. (NASDAQ:CFLT)

Value of Altimeter Capital’s investment: USD 396,622,751

Number of hedge fund owners: 37

Confluent, Inc. (NASDAQ:CFLT), a systems software company, is the sixth largest holding in Brad Gerstner’s portfolio. Confluent, Inc. (NASDAQ:CFLT) specializes in data streaming and helps companies analyze data generated in real time across various platforms such as mobile devices and social media.

The company was the first to commercially launch Apache Kafka, an open-source real-time data analytics software used by companies like Uber to match drivers and passengers for ride requests. Today, Confluent, Inc. (NASDAQ:CFLT) has many high-profile customers like Expedia and Vimeo that use the company’s services to enable travel bookings and video streaming on their platforms. The company continues to add new features to its platform to help customers manage large volumes of real-time data streams and run their core business operations.

Confluent’s (NASDAQ:CFLT) cloud revenue reached $107 million, up 45%, which accounts for the majority of subscription revenue. Earlier this month, the company launched Build with Confluent, which improves the efficiency of data streaming use cases through increased speed. The new partner program also includes specialized software packages to help customers collaboratively develop more efficient solutions. Confluent, Inc. (NASDAQ:CFLT) is not limited to just deploying data streaming applications. The company’s Connect and Govern products, which are part of its data streaming platform (DSP), are gaining momentum in the industry. Revenue growth for Govern was the fastest of any product launched by Confluent, Inc. (NASDAQ:CFLT). The company expects its cloud revenue to reach $116 million in the second quarter of 2024, representing a year-over-year growth rate of 39%.

Confluent, Inc. (NASDAQ:CFLT) is part of a fast-growing industry. According to a survey conducted by the firm, 86% of IT leaders say data streaming was a priority investment for them in 2024, indicating the need for use cases and applications for real-time data. Overall, Confluent, Inc. (NASDAQ:CFLT) is popular among investors. As of the end of the first quarter of 2024, 37 hedge funds held positions in the stock, with total holdings amounting to $949.63 million. The stock is up 30% year-to-date, and the median analyst price target suggests further upside of 22%.

CFLT total Rank 6 on our list of the best tech stocks to buy according to Brad Gerstner. You can visit The 10 best tech stocks to buy according to Brad Gerstner to see the other tech stocks that are on hedge funds’ radar. While we recognize CFLT’s potential as an investment, we believe AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than CFLT but trades at less than 5x earnings, read our report on the cheapest AI stock.

READ MORE: Analyst sees a new $25 billion ‘opportunity’ for NVIDIA and Jim Cramer recommends these 10 stocks in June.

Disclosure: None. This article was originally published on Insider Monkey.

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