15 Most Profitable Tech Stocks in 2023
In this piece, we will take a look at the 15 most profitable technology stocks in 2023. If you want to skip our introduction to the technology industry and want to take a look at the top five stocks in this list, then check out 5 Most Profitable Tech Stocks in 2023.
August 2023 is a crucial month as the stock market pours over the countless earnings reports for the second calendar quarter. The first half of the year saw mega technology cap stocks soar to record high levels, fueled by heightened optimism and expectations about artificial intelligence. At the same time, the fresh earnings report allowed investors and analysts to gauge the impact of the Federal Reserve's rapid interest rate hikes on corporate operations, and the dropping inflation's effects on revenues and consumer spending power.
The first two technology giants to report earnings this season were Meta Platforms, Inc. (NASDAQ:META) and Alphabet Inc. (NASDAQ:GOOGL). Both, like some of their other peers, are at the top of the recent AI wave. Meta, which owns Facebook, is expected to significantly benefit from artificial intelligence when it comes to providing users with advertisements and content recommendations based on their previous Facebook use and preferences in general. Facebook also announced a new artificial intelligence model in August through which it aims to enable users who speak different languages to communicate with each other.
On the earnings front, Meta reported $2.98 in adjusted earnings per share which marked a 16% annual growth. Revenue for the firm stood at $31.9 billion after growing by 11% annually. The earnings report also provided details about Meta's costly bet on the metaverse which not only saw the firm plow billions of dollars into the technology last year but also change its name to reflect the change. This bet came at the wrong time as far as the stock market was concerned, as investors were looking for cost cutting at a time of high interest rates and high inflation. This led to Meta's shares being one of the worst performing stocks in 2022, but the shares have roared back to life this year as they are up by 136% year to date.
Microsoft, which is another firm at the heart of the AI wave, grew its revenue by 8% annually as it reported $56.2 billion in net sales. However, the firm's guidance for the current quarter failed to impress investors and its shares slipped on the stock market as a result. Alphabet's results were far more impressive than Microsoft's as the firm beat analyst revenue estimates and posted $74.6 billion in revenue to mark a 7% annual growth.
Finally, the remaining two tech titans, namely Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) showed a mixed bag of results that reflected the current economic turmoil and uncertainty. Starting off with Apple, the largest technology company in the world relied on its services segment to beat top and bottom line analyst estimates. However, Apple, which relies on high end, premium products to earn its keep, saw its revenue drop by 1% annually with its hardware segment leading the drop as consumers felt a pinch to their purchasing power. Amazon, on the other hand, roared on the same day that Apple sounded a bit meek, as it beat analyst estimates for both revenue and net income and also surpassed the guidance estimates for the current quarter.
As to why Amazon managed to thrive in a tough consumer economy, here's what the firm's management had to say during the earnings call for the quarter:
Central to our efforts has been the decision to transition our stores’ fulfillment and transportation network from one national network in the United States to a series of eight separate regions serving smaller geographic areas. We keep a broad selection of inventory in each region, making it faster and less expensive to get those products to customers. Regionalization is working and has delivered a 20% reduction in number of touches for our delivered package, a 19% reduction in miles traveled to deliver packages to customers and more than 1,000 basis point increase in deliveries fulfilled within region, which is now at 76%. This is a lot of progress. Sometimes I hear people make the argument that Amazon is chasing faster speed, while driving its costs higher and where it doesn’t matter much to customers.
This argument is incorrect. There are two things to note. First, customers care a lot about faster delivery. We have a lot of data that shows when we make faster delivery promises on a detail page, customers purchase more often, not just a little higher, meaningfully higher. It’s also true that when customers know they can get their items really quickly, it changes their consideration of using us for future purchases too. Second, when shipments come from fulfillment centers that are closer to customers, they travel shorter distances, which cost less in transportation, gets there faster and is better for the environment. There’s a lot of goodness in that equation. This ability to have shipments closer to customers is the result of a lot of work and invention on the regionalization side, placement logic and local in-stock algorithms.
So which are the most profitable technology companies in 2023? The top three are Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL) and you can take a look at the rest below.
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Our Methodology
To compile our list of the most profitable technology companies in 2023, we first ranked the 40 biggest technology companies traded on U.S. exchanges (with some notable pink sheet exemptions) based on their market capitalization. Then, their latest twelve month period net income (trailing twelve months) was determined, and the top 15 most profitable technology companies this year are listed below.
15 Most Profitable Tech Stocks in 2023
15. Oracle Corporation (NYSE:ORCL)
Latest TTM Net Income: $8.3 billion
Oracle Corporation (NYSE:ORCL) is an enterprise productivity hardware and software provider. The firm has been deepening its partnership with the U.S. government since August 2023, as it has won top security clearance to host sensitive data and teamed up with the White House for an initiative to battle cancer.
During 2023's June quarter, 84 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Oracle Corporation (NYSE:ORCL). Out of these, the firm's largest investor is Jean-Marie Eveillard's First Eagle Investment Management since it owns $2.2 billion worth of shares.
Oracle Corporation (NYSE:ORCL) joins Alphabet Inc. (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL) in our list of the most profitable stocks in 2023.
14. NVIDIA Corporation (NASDAQ:NVDA)
Latest TTM Net Income: $10.78 billion
NVIDIA Corporation (NASDAQ:NVDA) is the rising star and darling of the chip industry these days. The firm's earnings result for its second quarter of the fiscal year 2024 was a stunner, as NVIDIA grew its revenue by 101% annually and its net income by an unbelievable 422% annually. To add the cherry on top, NVIDIA Corporation (NASDAQ:NVDA) also guided a 170% revenue growth for the current quarter.
As of June 2023, 175 out of the 910 hedge funds part of Insider Monkey's database had held a stake in NVIDIA Corporation (NASDAQ:NVDA). Out of these, Rajiv Jain's GQG Partners is the largest investor since it owns 13.9 million shares that are worth $5.8 billion.
13. QUALCOMM Incorporated (NASDAQ:QCOM)
Latest TTM Net Income: $11.8 billion
QUALCOMM Incorporated (NASDAQ:QCOM) is a semiconductor designer that provides processors, modems, and other products for smartphones and gadgets. The firm beat analyst EPS estimates for its second quarter earnings and the stock is rated Buy on average.
Insider Monkey dug through 910 hedge funds for their second quarter of 2023 shareholdings to discover that 73 had invested in the company. Israel Englander's Millennium Management is QUALCOMM Incorporated (NASDAQ:QCOM)'s biggest shareholder through a stake worth $270 million.
12. Tesla, Inc. (NASDAQ:TSLA)
Latest TTM Net Income: $12.5 billion
Tesla, Inc. (NASDAQ:TSLA) is the world's largest electric vehicle manufacturer. Its shares have been on a tear this year, having gained 120% year to date after massive losses in 2022. Tesla, Inc. (NASDAQ:TSLA) has also scored important wins this year, having secured several agreements with other car manufacturers to use its electric vehicle charging infrastructure in the U.S.
Insider Monkey scoured through 910 hedge funds for their investments during Q2 2023 and discovered that 79 had bought and invested in the firm's shares. Tesla, Inc. (NASDAQ:TSLA)'s biggest hedge fund shareholder is Catherine D. Wood's ARK Investment Management through an investment worth $1.2 billion.
11. Cisco Systems, Inc. (NASDAQ:CSCO)
Latest TTM Net Income: $12.6 billion
Cisco Systems, Inc. (NASDAQ:CSCO) is an enterprise communications products provider. Even as there is general caution in the market about enterprise technology firms, Cisco Systems, Inc. (NASDAQ:CSCO) has beaten analyst EPS estimates in all four of its latest quarters. Analysts have penned in a roughly $4 upside to the shares as well.
55 of the 910 hedge funds part of Insider Monkey's database had held a stake in Cisco Systems, Inc. (NASDAQ:CSCO) as of Q2 2023. Out of these, the largest investor is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital since it owns 20.7 million shares that are worth $1 billion.
10. Broadcom Inc. (NASDAQ:AVGO)
Latest TTM Net Income: $12.7 billion
Broadcom Inc. (NASDAQ:AVGO) is another connectivity products provider whose chips are used in modems, smartphones, and other devices. Amidst a broader slowdown in the chip sector, the firm stands to benefit from the shift to 5G. It also received praise from Bernstein analyst Stacy Rasgon lately who shared in a recent interview that Broadcom Inc. (NASDAQ:AVGO) can also benefit from the growing demand for AI products.
By the end of June 2023, 72 out of the 910 hedge funds profiled by Insider Monkey had invested in the firm. Broadcom Inc. (NASDAQ:AVGO)'s biggest investor among these is Ken Fisher's Fisher Asset Management through an investment worth $1.6 billion.
9. Amazon.com, Inc. (NASDAQ:AMZN)
Latest TTM Net Income: $13.07 billion
Amazon.com, Inc. (NASDAQ:AMZN) is the largest electronic commerce retailer in the world, which managed to post strong third quarter revenue and earnings guidance through a well time Prime Discount day that leveraged customer pain from high inflation.
Insider Monkey scoured through 910 hedge funds for their second quarter of 2023 investments and found out that 278 had bought Amazon.com, Inc. (NASDAQ:AMZN)'s shares. Ken Fisher's Fisher Asset Management is the largest stakeholder since it owns 40.6 million shares that are worth $5.3 billion.
8. Alibaba Group Holding Limited (NYSE:BABA)
Latest TTM Net Income: $11.61 billion (1CNY = 0.14USD)
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese technology conglomerate with e commerce, video gaming, and other business divisions. It is one of the few stocks on our list that is rated as Strong Buy by analysts on average, and the firm has managed to hold its ground despite a slowing Chinese economy.
After digging through 910 hedge funds for their investments during this year's second quarter, Insider Monkey discovered that 112 had held a stake in the company. Alibaba Group Holding Limited (NYSE:BABA)'s biggest hedge fund shareholder is David Tepper's Appaloosa Management LP through a stake worth $372 million.
7. Meta Platforms, Inc. (NASDAQ:META)
Latest TTM Net Income: $23 billion
Meta Platforms, Inc. (NASDAQ:META) is a social media and communications company. The firm is currently leveraging artificial intelligence to improve its products after it announced a new AI service to translate languages on Facebook and allow people from different nationalities to communicate with each other.
During Q2 2023, 225 out of the 910 hedge funds part of Insider Monkey's database had bought Meta Platforms, Inc. (NASDAQ:META)'s shares. Out of these, the firm's largest shareholder is Peter Rathjens, Bruce Clarke And John Campbell's Arrowstreet Capital through a $3 billion stake that comes via 10.7 million shares.
6. Tencent Holdings Limited (OTCMKTS:TCEHY)
Latest TTM Net Income: $26.1 billion (1CNY = 0.14USD)
Tencent Holdings Limited (OTCMKTS:TCEHY) is a Chinese technology conglomerate with financial tech, entertainment, and other businesses. A Chinese economic slowdown has affected the firm's financial performance, as it has missed analyst EPS in three of its four latest quarters.
Microsoft Corporation (NASDAQ:MSFT), Tencent Holdings Limited (OTCMKTS:TCEHY), Alphabet Inc. (NASDAQ:GOOG), and Apple Inc. (NASDAQ:AAPL) are some of the most profitable stocks in 2023.
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Disclosure: None. 15 Most Profitable Tech Stocks in 2023 is originally published on Insider Monkey.