10 Best AI Stocks to Buy According to Reddit

2. Alphabet Inc (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 216

Alphabet Inc (NASDAQ:GOOGL), or simply Google, is a multinational technology company that specializes in Internet-related services and products, such as online advertising, search engines, cloud computing, hardware, and software. It operates through three main segments, Google Services, Google Cloud, and Other Bets.

It dominates the online search and advertising sector, fueled by its expertise in algorithms and AI, and has a 90% market share in search and over 2 billion users for its advertising products.

The company’s Pixel 9 phones, which have an on-device AI assistant Gemini Nano, are a highlight, but the US Justice Department’s potential breakup has pressured the company’s shares. 216 hedge funds were long in the company by the second quarter of 2024. Fisher Asset Management is the top shareholder in the company and has a position worth $8.856 billion.

Alphabet Inc (NASDAQ:GOOGL) will reach a $100 billion revenue run-rate from YouTube Ads and Google Cloud by the end of 2024. During the second quarter, Cloud revenue alone rose 28.8%. The overall revenue growth was 13.59%, with a revenue of $84.74 billion. Google now has about 91.06% share of the search engine market, just 1.65% lower than the December 2019 levels.

The company’s shares slipped recently following reports that OpenAI is working on a web search product called SearchGPT. Analysts believe Google is one of the cheapest AI stocks due to its potential in GenAI, making it a top AI stock according to Reddit.

It is investing heavily in GenAI, and CEO Sundar Pichai believes it’s improving user satisfaction and increasing search usage, especially among younger users. Google plans to spend $50 billion on AI initiatives by the end of 2024.

Patient Capital Management stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOGL) was a top contributor in the second quarter, finally catching up to its peers in the Magnificent 7. The company gained 20.8% in the period following strong first quarter earnings, a new $70B repurchase program (3% of shares outstanding) and the initiation of a cash dividend ($0.20 per share; 0.42% yield). We continue to believe the market underappreciates Google’s exposure to AI with its Gemini model being integrated into search results, YouTube advertising and its cloud offering. We continue to think that the cloud players will be the AI winners in the long-term, with Google being well positioned to take advantage. While the company trades at 24x 2024 earnings, if you remove the money-losing and under-earning businesses, you realize that you are paying below a market multiple for the core Google business. We do not believe there are many other AI winners trading at such an attractive multiple.”