2 Stocks Billionaire Investors Are Piling Into

Hedge funds are the VIP lounges of investing. They are locked tight to keep the little guy out, while swinging their doors wide open for the elite. While regulations keep them exclusive, you can still peek over the velvet rope to see what they are doing. 

Every quarter, these big shots file Form 13F with the Securities & Exchange Commission, spilling the beans on their stock trades. It’s a treasure map to where billionaires are betting big, which is something you just might want to follow.

While you don’t want to blindly follow their trades without performing your own due diligence, seeing where the smart money is placing its bets can be a good investment strategy. You likely won’t snag the exact entry price of these hedge fund darlings, and that’s actually a good thing. Even investing legends like Warren Buffett don’t always buy at the dip. Jumping in after the smart money can score you a sweeter deal, though runaway rallies can leave you chasing. 

Let’s unpack two fresh hedge fund picks and see if they’re ripe for the taking or are they already out of reach.

Broadcom (AVGO)

Broadcom (NASDAQ:AVGO) is a standout investment, riding the AI wave with stellar fiscal first-quarter earnings, a juicy dividend, and robust growth potential in a shifting semiconductor landscape. At $191, it’s a compelling pick for savvy investors. It was for Millennium Management‘s Israel Englander who picked almost 6.2 million shares in the fourth quarter at an average price of $202 per share.

Broadcom crushed it in the first quarter. Revenue soared 25% year-over-year to $14.9 billion, topping Wall Street’s $14.6 billion estimate. Adjusted earnings hit also beat estimates coming in at $1.60 per share versus analyst projections for $1.50 per share. 

Artificial intelligence revenue spiked 77% to $4.1 billion, or 27% of total sales, while infrastructure software — boosted by Broadcom’s VMware’s integration, jumped 47% to $6.7 billion. Free cash flow rose 28% to $6 billion, and a $9.3 billion cash pile offers flexibility.

The semiconductor landscape is tilting heavily toward AI spending, and Broadcom’s poised to dominate. Second-quarter guidance of $14.9 billion was ahead of the $14.75 billion expected and reflects hyperscaler demand for AI XPUs and networking chips. With VMware driving software margins to 66%, Broadcom is diversified beyond rival Nvidia’s (NASDAQ:NVDA) narrow GPU focus. 

Broadcom’s pivot to AI is paying off handsomely and offers healthy support to its dividend that yields 1.2% annually. The payout has grown 33% annually for the past decade and 14% over the last five years, backed by a 43% free cash flow payout ratio. Unlike Nvidia’s token yield, Broadcom blends growth with income giving investors a rare semiconductor perk.

Analysts see earnings of $6.60 per share this year with a $231 per share one-year consensus price target, implying 18% upside. In a cyclical chip market, its $900 billion market cap and AI-software combo provide resilience for your portfolio.

Costco (COST)

Despite Costco (NASDAQ:COST) stock tumbling 17% over the past month, the warehouse club still shines as a smart buy. Its fiscal second-quarter earnings offered hardy, if mixed results; a dependable dividend; and stood resolute against a brewing trade war. At $888 per share, it’s a retail titan worth betting on.

Ken Griffin at Citadel Advisors increased his stake in COST stock by 800%, buying almost 238,000 shares at an average price of $901 per share. His holdings are now worth $247 million, but you can buy COST stock today at a discount from what Griffin paid.

Costco’s results delivered several puts and takes, but still delivered a promising punch. Revenue surged 9% to $63.7 billion, topping estimates of $63.1 billion, fueled by and 8.6% increase in adjusted U.S. comparable sales. E-commerce also soared 22%.

Earnings of $4.02 per share did miss the $4.11 forecast, but net income rose to $1.79 billion from $1.74 billion a year ago. With $12.4 billion in cash, a 25% year-over-year increase, and only $5.7 billion in debt, Costco’s fortress balance sheet stands strong against shaky times.

Yet we can’t ignore the growing global trade war, as Costco is a major importer, in fact, the world’s 12th largest, according to the Observatory of Economic Complexity. Still, Costco’s value model thrives. 

Membership fees hit $1.2 billion, up 7%, with 78.4 million paid members who renew at rates exceeding 90%. Costco is also planning for 28 new warehouses in 2025, including 10 abroad in a bid to tap a $1 trillion retail market. 

With analysts forecasting earnings of $16.50 per share for the coming year and tagging it with $1,030 per share price target — 16% upside from current prices — it should be able to counter tariff-driven inflation from its customers seeking to buy in bulk to save money.

Costco’s dividend is the icing on the cake. Yielding 0.5%, the payout has grown for 20 straight years, with a 38% payout ratio giving it room for growth. And in three of the last eight years, the retailer has rewarded shareholders with an extra payout, allowing Costco to blend income with muscle.

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