FedEx Corporation (FDX): Among Top Stocks in Bill Gates’ Portfolio with Huge Upside Potential

In a move signaling confidence in the logistics sector’s post-pandemic recovery, Microsoft co-founder Bill Gates has positioned FedEx Corporation (FDX) as a key holding in his 2025 investment portfolio. Alongside Paccar (PCAR), FedEx received a $373 million allocation in the third quarter of 2024, with Gates acquiring 1 million shares of each company through the Bill & Melinda Gates Foundation Trust. This strategic bet underscores a belief that FedEx is poised to capitalize on rising e-commerce demand, falling interest rates, and a broader economic rebound.

Why FedEx? The Financials Tell the Story

Despite a slight dip in second-quarter fiscal 2025 revenue to $22.0 billion (down from $22.2 billion in the prior year), FedEx has demonstrated operational resilience. CEO Raj Subramaniam highlighted growth in the Federal Express segment, a critical pillar of the company’s premium delivery services. Even as U.S. domestic demand faces near-term headwinds, FedEx’s global footprint and cargo airline network—ranked among the largest in the world—position it to outperform peers during cyclical upturns.

The stock has delivered an 11% total return over the past year, outpacing the S&P 500’s flat performance and UPS’s 3% decline. This outperformance reflects investor optimism about FedEx’s cost-cutting initiatives and strategic reorganization.

Strategic Moves to Drive Long-Term Value

Gates’ investment aligns with FedEx’s aggressive restructuring. The company aims to spin off its Freight division into a standalone public entity within 18 months, a move expected to unlock value for shareholders. Additionally, FedEx has committed to $1.5 billion in share repurchases, including a pending $500 million buyback in fiscal 2025. These actions, paired with its DRIVE transformation program targeting $2.2 billion in annual cost savings, signal a focus on boosting profitability.

Analysts are taking notice. The consensus rating of “Moderate Buy” reflects cautious optimism, with a mean price target of $324.15—a 18% upside from its current price of $277. This target is underpinned by an updated fiscal 2025 earnings outlook of $19–$20 per share, up from $18.50 in prior guidance.

Valuation metrics further support the bullish case. At a forward P/E of 14.22x, FedEx trades below the industry average of 16.5x, offering a margin of safety. The company’s 2.01% dividend yield ($5.52 per share) also provides downside protection, a critical feature in today’s volatile markets.

Risks and the Case for Long-Term Faith

No investment is without risks. FedEx faces challenges in its U.S. domestic package business, where pricing pressures and contract expirations could weigh on margins. However, Gates’ multiyear horizon suggests he views these as temporary hurdles. The logistics giant’s exposure to e-commerce—a sector growing at 10% annually—offers a tailwind. As online retail penetration expands in emerging markets, FedEx’s global scale becomes a competitive advantage.

Conclusion: A Calculated Bet on Recovery

Bill Gates’ inclusion of FedEx in his portfolio is no accident. With a market cap of $66.14 billion, a disciplined balance sheet, and a clear path to cost savings, FedEx is well-positioned to thrive as global commerce rebounds. Analysts’ 18% upside target and the company’s 11% 52-week price appreciation reflect this optimism.

While near-term risks like domestic demand fluctuations are valid, the strategic moves—spinning off non-core assets, repurchasing shares, and focusing on operational efficiency—suggest management is laser-focused on shareholder returns. At a valuation discount to peers and with a dividend yield above the S&P 500 average, FDX offers a compelling risk-reward profile. For investors willing to look past short-term noise, this could be the logistics play to own as the economy turns the corner.