In this article, we'll take a look into Goldman Sachs' top 15 stock picks for 2024. If you prefer to skip the introduction about the investment bank and its recent business developments, you can just dive straight into Goldman Sachs' Top 5 Stock Picks for 2024.
Established in 1869 by German immigrant Marcus Goldman, Goldman Sachs has evolved into the world's second-largest investment bank by revenue, amassing $1.65 billion in fees during the first quarter of 2024. From its modest origins in a one-room basement office adjacent to a coal chute, the bank has expanded steadily over the years. In 1906, it made its mark in the initial public offering (IPO) market with the iconic Sears, Roebuck, & Co. Goldman Sachs was among the pioneers in emphasizing price-to-earnings (P/E) ratios over book values for company valuation.
Banks are intricately linked to the fluctuations in interest rates due to their core function of dealing with money. While consumers may lament higher rates, banks often welcome them as they can widen their profit margins, known as the 'spread,' even amidst reduced borrowing demand during tighter monetary conditions. However, higher interest rates can challenge banks to manage their asset base, including funds invested in securities like bonds. Sharp rate fluctuations necessitate the revaluation of these securities, potentially resulting in losses that could jeopardize the stability of even the most profitable of banks. This was evident in the US banking crisis of 2023, particularly impacting Goldman Sachs, which reported a substantial $470 million loss in its loan portfolio during the first quarter of that year. This loss was part of the bank's efforts to restructure its retail banking division in response to the challenging environment.
Despite grappling with such challenges a year ago as it ventured into Main Street endeavors, Goldman Sachs came back strong by refocusing on its core strengths. In the first quarter of this year, it surpassed analyst expectations by nearly $1 billion, garnering close to $4 billion in earnings, largely driven by substantial profits in its trading and corporate advisory divisions. While analysts anticipated a turnaround in deal-making activities, Goldman Sachs exceeded this forecast. Notably, the bank's investment banking fees soared by an impressive 32% in the latest results, reaching $2.08 billion. Additionally, the consumer banking division reported a noteworthy 24% revenue growth, marking a refreshing change after years of costly losses and write-downs.
Despite the investment bank's surge in revenues, its net provisions for litigation and regulatory matters were a mere $23 million for the first quarter of 2024, a notable reduction compared to the previous year. Additionally, Goldman Sachs trimmed its workforce by 2% following the sale of home lending firm GreenSky in October. This divestiture aligns with the bank's recent strategic shift away from consumer banking to prioritize its core offerings: Global Banking & Markets and Asset & Wealth Management. Despite incurring a $506 million loss from the sale in 2023, CEO David Solomon remains optimistic, citing the resurgence of capital markets and promising business prospects in Goldman's core sectors as the catalysts for the bank's turnaround. These results were especially gratifying for the bank, coming shortly after rival JPMorgan Chase & Co. (NYSE:JPM) experienced its sharpest stock decline in almost four years, acknowledging a more challenging outlook than previously expected.
Curious about Goldman Sachs' outlook for the future? Here's a glimpse into what its management said during its first-quarter 2024 earnings call:
In debt capital markets, tighter spreads have contributed to a constructive issuance environment and investment grades with volumes hitting a record for the first three months of the year. Additionally, refinancing was a major theme with robust high-yield and institutional loan refinancing volumes. Given a more accommodative issuance backdrop as well as the potential for increased acquisition financing, alongside higher M&A activity, we expect solid levels of debt underwriting activity to continue this year. With our long-standing leadership positions across the global capital markets, we have been at the forefront in helping our clients access the markets and our firm stands to benefit further as transaction volumes rise from the 10-year lows.
Amidst a backdrop of cautious optimism brewing at JPMorgan, we've scrutinized its leading stock selections. Noteworthy among them are Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA).
Goldman Sachs' Top 15 Stock Picks for 2024
Our Methodology
To compile our roster of Goldman Sachs' top stock picks for 2024, we reviewed the bank's submissions to the SEC, pinpointing its 15 most substantial investment holdings. Our evaluation process also incorporates insights from Insider Monkey's repository of 933 hedge funds, as of the final quarter of 2023. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
Costco Wholesale Corporation (NASDAQ:COST) operates a global network of membership warehouses renowned for offering high-quality, brand-name products at significantly lower prices than traditional retail outlets. As of April 25, the company provides a quarterly dividend of $1.15 per share, equating to a dividend yield of 0.64%. Impressively, Costco Wholesale Corporation (NASDAQ:COST) has consistently increased its dividend for the past 19 years, underscoring its commitment to rewarding shareholders.
Insider Monkey's data reveals that Costco Wholesale Corporation (NASDAQ:COST) was held in 57 hedge fund portfolios at the end of Q4 2023, down from 65 in the previous quarter. Nevertheless, these hedge funds' stakes in Costco have a combined value exceeding $4 billion.
Much like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA), Costco Wholesale Corporation (NASDAQ:COST) ranks as one of Goldman Sachs' top stock picks.
Accenture plc (NYSE:ACN) is a leading American multinational professional services company, providing consulting, technology, and outsourcing services to its clients. On March 21, the company announced a quarterly dividend of $1.29 per share, consistent with its previous dividend payments. Notably, Accenture plc (NYSE:ACN) has maintained a consistent dividend record since 2005 and has increased its payouts at an average annual rate of 12.33% over the past five years.
In the fourth quarter of 2023, Insider Monkey's database revealed that 58 hedge funds held stakes in Accenture plc (NYSE:ACN), up from 55 in the previous quarter. The combined value of these holdings amounted to approximately $2.4 billion. GuardCap Asset Management emerged as the company's top stakeholder in Q4.
Based in California, Broadcom Inc. (NASDAQ:AVGO) is a prominent American company specializing in semiconductor and infrastructure software products. The company derives a significant portion of its revenue from semiconductor-based products.
In March, TD Cowen upgraded Broadcom Inc. (NASDAQ:AVGO) shares from Market Perform to Outperform and raised the share price target to $1,500 from $1,400.
Insider Monkey examined 933 hedge fund portfolios for their shareholdings in the December quarter of 2023 and identified 91 stakeholders in Broadcom Inc. (NASDAQ:AVGO). Ken Fisher’s Fisher Asset Management held the largest stake, valued at $2.3 billion.
Established in 1876, Eli Lilly and Company (NYSE:LLY) is a prestigious American pharmaceutical firm headquartered in Indianapolis, Indiana. Named after its founder, Colonel Eli Lilly, a pharmaceutical chemist and veteran of the Civil War, the company boasts a global presence, with operations in 18 other countries. Eli Lilly and Company (NYSE:LLY) currently distributes a quarterly dividend of $1.30 per share and has consistently increased its dividends over the past decade. Moreover, the company has an impressive history of paying dividends uninterrupted for 138 years. As of April 25, the stock offers a dividend yield of 0.72%.
By the end of December 2023, 102 out of the 933 hedge funds analyzed by Insider Monkey had acquired and retained shares of the company. Among these, Ken Fisher’s Fisher Asset Management held the largest stake in Eli Lilly and Company (NYSE:LLY), valued at $2.6 billion.
Berkshire Hathaway Inc. (NYSE:BRK-B), headquartered in Omaha, Nebraska, is a diversified multinational conglomerate holding firm primarily operating in the insurance sector. The company leverages the capital generated from insurance operations to invest in a wide range of subsidiaries, equity holdings, and securities across various industries. This diversified portfolio enables Berkshire Hathaway Inc. (NYSE:BRK-A) to maintain resilience in the face of challenges such as high interest rates.
In the fourth quarter of the previous year, 117 out of the 910 hedge funds analyzed by Insider Monkey had invested in Berkshire Hathaway Inc. (NYSE:BRK-B). Among these investors, the largest shareholder was Michael Larson’s Bill & Melinda Gates Foundation Trust, which held 19.9 million shares valued at $7.1 billion.
Based in Minnetonka, Minnesota, UnitedHealth Group Incorporated (NYSE:UNH) is a prominent American multinational corporation specializing in managed healthcare and insurance services. The corporation operates for profit and is structured into four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx.
On April 16, UnitedHealth Group Incorporated (NYSE:UNH) released its first-quarter earnings report. The company posted a non-GAAP EPS of $6.91, exceeding estimates by $0.29. Revenue grew by 8.6% year-over-year to $99.79 billion, surpassing market estimates by $490 million.
In the fourth quarter of 2023, 113 hedge funds held stakes in UnitedHealth Group Incorporated (NYSE:UNH), with total positions valued at $11.198 billion. This marks an increase from the preceding quarter, which saw 104 funds with positions valued at $10.95 billion. As of December 31, 2023, GQG Partners held the largest stake in the company, valued at $1.8 billion.
UnitedHealth Group Incorporated (NYSE:UNH) joins the ranks of Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA) as one of Goldman Sachs' top stock picks.
Headquartered in New York, JPMorgan Chase & Co. (NYSE:JPM) operates globally across various sectors, including Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management.
On March 13, RBC Capital analysts maintained an Outperform rating on JPMorgan Chase & Co. (NYSE:JPM) with a price target of $185.
Insider Monkey's analysis of 933 hedge fund holdings for their fourth quarter of 2023 shareholdings revealed that 103 had invested in the bank. Notably, Ken Fisher’s Fisher Asset Management held the largest stake in JPMorgan Chase & Co. (NYSE:JPM), valued at $2 billion.
Carillon Tower Advisers said the following about JPMorgan Chase & Co. (NYSE:JPM) in its fourth-quarter 2023 investor letter:
“PNC Financial and JPMorgan Chase & Co. (NYSE:JPM) performed well due to more benign inflation data, which the market likely interpreted as a sign that a recession is now less likely to occur. Recall that historically speaking, banks are hyper-cyclical stocks and typically will trade lower if investors foresee a recession, because recessions tend to trigger loan losses.”
Headquartered in the United States, Meta Platforms, Inc. (NASDAQ:META) is a renowned multinational technology company recognized for its social networking services and advertising solutions, which span platforms such as Facebook, Instagram, Threads, and WhatsApp.
On April 9, TD Cowen analyst John Blackledge reaffirmed a Buy rating on Meta Platforms, Inc. (NASDAQ:META) and increased its price target by $90 to $590. Additionally, TD Cowen raised the company’s revenue estimates for the first quarter of 2024 and the years 2024-2029 by 1%-4% annually.
Insider Monkey's examination of 933 hedge fund holdings for their fourth quarter of 2023 shareholdings revealed that 242 had invested in Meta Platforms, Inc. (NASDAQ:META). Notably, Rajiv Jain’s GQG Partners held the largest stake, valued at $3.9 billion.
Headquartered in Austin, Texas, Tesla, Inc. (NASDAQ:TSLA) is a leading manufacturer of fully electric vehicles and energy solutions. Their diverse product lineup includes popular models like the Model 3 and Model S sedans, Model Y and Model X SUVs, along with upcoming innovations such as the Cybertruck, Tesla Roadster, and Tesla Semi for light commercial use.
Insider Monkey's analysis of hedge fund holdings at the end of December 2023 revealed that 82 out of 933 profiled hedge funds had invested in Tesla, Inc. (NASDAQ:TSLA). Notably, Philippe Laffont's Coatue Management emerged as the company's largest hedge fund shareholder, with a substantial $1 billion investment.
Tesla, Inc. (NASDAQ:TSLA) was mentioned by Tsai Capital Corporation in its fourth-quarter 2023 investor letter. Here is what the firm commented:
“Tesla has significant and underappreciated competitive advantages across multiple verticals including electric vehicles, software and energy storage. Misunderstood by much of Wall Street – and consequently a favorite of short sellers – Tesla continues to grow rapidly and increase its lead over the competition while delighting consumers in the process. [. . .] While we expect competition for EVs to intensify and for Tesla to lose market share over time, we also believe the company will increase production and deliveries from approximately 1.8 million vehicles today to approximately 15 million vehicles in 2030 and further its lead in autonomous driving capability. In fact, we expect Tesla will eventually license its autonomous driving software, creating high-margin (70-80%), recurring licensing revenue. Tesla is also one of only two companies that dominate the energy storage market, which has the potential to grow to several hundred billion in revenue as power plants around the world increase their focus on renewable energy.”
Visa Inc. (NYSE:V) is a financial services firm renowned for its provision of debit cards, credit cards, and associated services. With a robust global payment network, Visa (NYSE:V) stands out in the e-commerce sector, facilitating secure and efficient online transactions.
Recently, on April 3, Visa Inc. (NYSE:V) unveiled its latest offering, Subscription Manager, as part of its Digital Enablement product suite. This service empowers financial institutions to offer cardholders a streamlined method to monitor their subscriptions directly through their banking apps.
Insider Monkey's analysis of fourth-quarter 2023 shareholdings revealed that 162 out of 933 tracked hedge funds had invested in Visa Inc. (NYSE:V). Notably, Chris Hohn's TCI Fund Management held the largest stake, valued at $4.3 billion.
In addition to Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and NVIDIA Corporation (NASDAQ:NVDA), Visa Inc. (NYSE:V) is one of Goldman Sachs' top stock picks for 2024.