10 Best Magic Formula Stocks for 2025

5. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 234

Gotham Asset Management’s Q4 2024 Stake: $74.67 million

Alphabet Inc. (NASDAQ:GOOGL) is a global technology giant known for its diverse products, including Google Cloud and Google Services, which dominate a number of market segments. Recently, Alphabet and Taiwan’s HTC agreed to invest $250 million to strengthen their position in XR (extended reality) technology. This comes after Google released the Android XR platform back in December, which was created in collaboration with Qualcomm and Samsung Electronics.

Needham analyst Laura Martin retained a Buy rating and a price target of $225 on GOOGL shares on February 5. Martin cited the company’s impressive 12% year-over-year revenue growth in Q4 2024, which was primarily driven by strong performance in Google Search and Cloud. The company’s cloud division also saw a 30% increase in revenue due to strong demand for AI-powered solutions and strategic deals worth over $1 billion.

Oakmark Funds stated the following about Alphabet Inc. (NASDAQ:GOOGL) in its Q4 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. Despite ongoing litigation with the Department of Justice in its antitrust case, the U.S.-headquartered interactive media and services company’s stock price rose after posting solid third-quarter earnings. In the Search division, the company generated low-teens year-over-year revenue growth and management highlighted that they’re seeing strong user engagement with their new AI Overviews feature. The biggest upside surprise came from the Cloud division, where revenue growth accelerated to 35% and margins reached a record of 17%. This performance was driven by client demand for AI Infrastructure and Generative AI Solutions as well as core Google Cloud Platform (GCP) products. We continue to believe Alphabet is a collection of great businesses that can unlock further value over the long term through its world-class AI capabilities.”