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3 Alternatives to the ‘Magnificent Seven’ Stocks Billionaires Love

Last year’s excessive price development of the ‘Magnificent Seven shares’ made headlines. So it’s no surprise that billionaire hedge funds are investing in many of these companies.

But the Magnificent Seven aren’t the only stocks these billionaires are buying. The Motley Fool research team analyzed the top technology positions in 16 hedge funds owned by these wealthy moguls. In addition to the Magnificent Seven, this insight can also provide you with potential investments for your portfolio.

Let’s take a look at three of these stocks owned by billionaires: Sales team (NYSE: CRM), Take-Two interactive software (NASDAQ: TTWO)And Snowflake (NYSE: SNOW). This is why these three are compelling alternatives to the Magnificent Seven.

1.Salesforce

After the Magnificent Seven, Salesforce is the largest technology stock owned by billionaires. The company is a giant in the field of customer relationship management software.

Salesforce’s platform meets a number of business needs across sales, marketing, and customer service. It also uses artificial intelligence as a means for customers to automate mundane tasks in their operations.

Salesforce saw great success in its fiscal year 2024, which ended January 31. Revenue rose to $34.9 billion, an 11% increase from the previous year’s $31.4 billion. The company expects revenue growth to continue into fiscal 2025, forecasting revenues of approximately $38 billion, up 9% year over year.

Together with strong revenue growth, Salesforce generated free cash flow (FCF) of $9.5 billion in fiscal 2024. That’s an impressive 50% jump from last year’s $6.3 billion.

The company’s strong FCF led to shareholders being rewarded with dividend payments this year, the first time in Salesforce’s 25-year history. The company has introduced a quarterly dividend of $0.40 per share.

2. Take-Two interactive

In Motley Fool’s analysis, Take-Two is the only company focused solely on video games and among the top billionaire tech companies. One reason for this is Take-Two’s portfolio of popular franchises. In the gaming industry, a popular 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 VIin 2025. The final entry in the franchise, Grand Theft Auto Vreleased in 2013, is one of the three best-selling video games of all time.

More than ten years later, the Grand Theft Auto series continues to generate revenue and contribute 15.2% to Take-Two’s net sales through the first three quarters of fiscal 2024 ending December 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. A film of the latter will be released in August.

In addition to its successful franchises, Take-Two owns mobile gaming giant Zynga. This portion of the business accounted for $706.7 million of the company’s $1.4 billion in revenue in the fiscal third quarter.

Take-Two plans to grow Zynga’s revenue by releasing new mobile games in the 2025 fiscal year, which began in April, and using a combination of in-app purchases and advertising.

The consensus among Wall Street analysts is an Overweight rating with an average price target of $179.27 for Take-Two stock, indicating a belief in future upside for shares.

3. Snowflake

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 provide insights that help the business grow.

The rise of artificial intelligence has made this data more valuable. As Snowflake’s new CEO Sridhar Ramaswamy said, “There is no AI strategy without a data strategy.”

That’s because AI systems require large amounts of data to perform tasks quickly and accurately. The Snowflake platform can aggregate this data and make it easily accessible to AI software.

Demand for Snowflake’s data management platform enabled the company to achieve strong revenue growth. For the 2024 fiscal year ended Jan. 31, Snowflake posted revenue of $2.8 billion, up 36% from the previous year’s $2.1 billion.

The company expects sales to continue to grow. In fiscal year 2025, Snowflake estimates revenue will reach $3.3 billion.

Shares fell after former CEO Frank Slootman announced his retirement on February 28. This creates a buying opportunity. The consensus among Wall Street analysts is an overweight rating with an average price target of $210 for Snowflake stock.

Given their many attractive features, it’s no wonder that Snowflake, Take-Two and Salesforce are popular stocks among billionaire investors. These alternatives to the Magnificent Seven could also be attractive long-term investments for you.

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Robert Izquierdo holds positions at Salesforce, Snowflake and Take-Two Interactive Software. The Motley Fool holds positions in and recommends Salesforce, Snowflake and Take-Two Interactive Software. The Motley Fool has a disclosure policy.

3 Alternatives to the “Magnificent Seven” Stocks Billionaires Love was originally published by The Motley Fool