Robinhood, the online brokerage that famously made commission-free trading a norm, has become synonymous with meme stocks and high-risk investments. Yet, they reveal that the ten most-held stocks by their users include: Amazon, Apple, Alphabet, Tesla, Nvidia, Palantir, Meta Platforms, Microsoft, Netflix, and Ford Motor Company.
All of these stocks, except Palantir, are generally regarded as blue-chip. While many Robinhood investors are still drawn to promising tech stocks, it appears not everyone is leaning toward the volatile meme stock scene, such as GameStop.
Looking specifically at these stocks, two have garnered the most Buy ratings from Wall Street analysts—Alphabet and Amazon, currently tied at 58 Buy ratings. So, why are these two stocks considered standout choices, and are they still a sound investment in the current market?
Alphabet’s Google dominates key areas like search engines, mobile operating systems, web browsers, and video streaming. Additionally, they have robust offerings in cloud infrastructure and productivity software, with their new Gemini generative AI platform rapidly gaining traction.
This extensive ecosystem positions Google well to capitalise on the growth in digital advertising, cloud services, and AI. They provide a rich source of data for tailored advertising and AI offerings, which can be bundled together, making it harder for smaller rivals to compete. Despite facing ongoing scrutiny from antitrust regulators, Google has withstood various legal challenges over the last decade.
Although targeted advertising remains a primary revenue source, Google is diversifying with subscription services like Google One and YouTube Premium. Their Google Cloud platform is also expanding quickly as businesses upgrade their cloud systems for generative AI capabilities.
Analysts predict that Alphabet’s revenue and earnings per share (EPS) will increase at a compound annual growth rate (CAGR) of 15% and 12%, respectively, over the next few years. The current price-to-earnings (P/E) ratio is around 26x, which seems reasonable given the potential growth in the cloud and AI sectors.
Amazon stands as the largest player in both e-commerce and cloud infrastructure. Although a considerable part of its revenue comes from retail, most profits are actually sourced from Amazon Web Services (AWS), which leads in cloud solutions.
The profitability of AWS enables Amazon’s retail arm to adopt aggressive growth tactics, even at a loss. This is crucial for maintaining an ever-expanding base of Prime members, who enjoy benefits like exclusive discounts and free shipping. With over 240 million Prime subscribers globally, Amazon has established a significant competitive edge.
The expansion of Amazon’s e-commerce segment will be supported through enhancements to its logistics, faster delivery options, and entry into new markets. The growth in AI will also boost its cloud business, and to tap into this trend, Amazon is introducing AI development tools and dedicated services. Additionally, the company is expanding its lucrative advertising sector for an extra revenue stream.
Forecasts indicate that Amazon’s revenue and EPS may grow at a CAGR of 12% and 18%, respectively, from 2025 to 2028. The current P/E ratio of 26x isn’t seen as high, with substantial potential for future increases as its businesses evolve.
In my view, both Alphabet and Amazon are solid, long-term stocks worthy of Wall Street’s positive outlook. It’s refreshing to witness Robinhood investors favoring these established companies over speculative ventures, and they still appear to be attractive buys in this uncertain market.
Before jumping into stock purchases on Robinhood, it’s worth considering the following:
The analyst group from Stock Advisor has identified which stocks they believe are the best options right now, and interestingly, Robinhood Markets is not included among them. These top ten stocks are anticipated to provide impressive returns in the upcoming years.
To illustrate potential gains, if you had invested $1,000 in Netflix at its recommendation point, you would now have $415,256! Likewise, an investment in Nvidia made at the right time would have netted an impressive $1,133,904!
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The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, Palantir Technologies, and Tesla. They maintain a disclosure policy related to their investment positions.
Two of Robinhood’s top 10 stocks are named Best Buys, according to Wall Street.
