One strategy retail investors can deploy is replicating the buying patterns of hedge funds and other billionaires. Generally, institutional investors and other high-net-worth individuals have access to data or information that helps them make better decisions than the average retail investor. 

In a significant portfolio realignment during Q1, legendary investor Stanley Druckenmiller demonstrated a strong commitment to healthcare and tech stocks. According to SEC filings, Druckenmiller’s Duquesne Family Office completely exited 37 positions while adding 12 new stocks. 

Duquesne exited positions in tech giants, including Alphabet (GOOG) (GOOGL), Amazon (AMZN), and Tesla (TSLA). The investment firm opened a new position in AppLovin (APP) and increased exposure to Taiwan Semiconductors (TSM). While Big Tech companies have dominated the narrative in recent years, it might be time to look beyond these companies, given their decelerating growth rates and lofty valuations. 

Is AppLovin Stock a Good Buy?

Valued at a market cap of nearly $123 billion, AppLovin (APP) offers a software platform that helps advertisers optimize mobile marketing through two segments: Advertising and Apps. It provides technology for ad matching, in-app bidding, analytics, and connected TV distribution. AppLovin also operates free-to-play mobile games, serving both individual users and enterprises seeking to monetize digital content effectively.

In Q1 2025, AppLovin reported revenue of $1.5 billion, an increase of 40% year over year. Moreover, adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 83% to $1 billion, indicating a margin of 68%. 

AppLovin’s performance was driven by its AXON machine learning technology, which continues to improve through reinforcement learning and directed enhancements from the engineering team. These technological improvements have enabled mobile gaming companies to scale their campaigns more effectively on AppLovin's platform.

CEO Adam Foroughi highlighted three key priorities for 2025: improving machine learning models, advancing e-commerce and web advertising solutions, and enhancing ad testing and automated ad creation. The company is preparing to launch a self-service dashboard this quarter for select customers, with plans for broader rollout in the coming quarters.

AppLovin also announced the signing of a definitive agreement to sell its Apps business to Tripledot Studios for $400 million in cash plus a 20% ownership stake in the combined business, allowing it to sharpen its focus on advertising.

For Q2, AppLovin expects its Advertising business to generate between $1.195 billion and $1.215 billion in revenue with adjusted EBITDA between $970 million and $990 million. With operational efficiency generating approximately $4 million in run-rate adjusted EBITDA per employee annually, and free cash flow of $826 million in Q1 (up 113% year-over-year), AppLovin demonstrates how AI-based businesses can drive exceptional financial performance while maintaining a lean operational model.

Of the 21 analysts covering APP stock, 17 recommend “Strong Buy,” three recommend “Hold,” and one recommends “Strong Sell.” The average target price for APP stock is $460, above the current price near $370. 

Is TSM Stock Undervalued?

Taiwan Semiconductor Manufacturing (TSM) delivered solid results in Q1. It reported revenue of $25.5 billion in the March quarter, an increase of over 40% year over year.  

At the midpoint estimate, it forecast Q2 revenue at $28.8 billion, representing an impressive 13% sequential increase and 38% year-over-year growth. This strong guidance is driven by robust demand for 3-nm and 5-nm technologies, particularly from AI-related applications.

Management continues to project full-year revenue growth in the mid-20% range, outperforming the broader foundry industry’s expected 10%-11% growth. It reaffirmed AI-related revenue will double in 2025, with AI accelerator revenue expected to grow at a mid-40% CAGR over the next five years.

TSM recently announced an additional $100 billion investment plan for Arizona, bringing its total U.S. commitment to $165 billion. This expansion will include three additional wafer manufacturing fabs, two advanced packaging facilities, and a major R&D center. Upon completion, approximately 30% of TSM’s 2-nm and more advanced capacity will be in Arizona.

While overseas expansion will create 2%-3% margin dilution this year, widening to 3%-4% in later years, management remains confident a long-term gross margin of 53%-plus is achievable. The company is already discussing pricing adjustments with customers to reflect the value of geographic flexibility.

TSM’s 2-nm technology remains on track for volume production in the second half of 2025, with customer tape-outs exceeding those of 3-nm and 5-nm in their first two years. This indicates strong customer adoption across smartphone and high-performance computing applications.

Out of the 11 analysts covering TSM stock, eight recommend “Strong Buy,” two recommend “Moderate Buy,” and one recommends “Hold.” The average target price for the tech stock is $229, above the current trading price near $193.