3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 222
Alphabet Inc. (NASDAQ:GOOG) is a multinational technology conglomerate that offers various products and platforms internationally. It is the parent company of Google and other subsidiaries including Waymo, which focuses on developing autonomous vehicle technology.
Waymo started as Google’s self-driving car project and has progressed to become a leader in the autonomous vehicle industry. The subsidiary has served more than 2 million trips to date and has successfully driven 20 million autonomous hours on the road. Waymo makes Alphabet Inc. (NASDAQ:GOOG), one of the best autonomous vehicle stocks to buy. It was held by 222 hedge funds during the Q1 of 2024, with total stakes worth $19.75 billion. Cantillon Capital Management is the top share holder of the company with a position worth $837.24 million.
Alphabet Inc. (NASDAQ:GOOG) delivered a strong second quarter of 2024, with consolidated revenue growing 14% year-over-year to reach $84.7 billion. Growth in revenue due to strong performance across the board. The Google Cloud revenue made history by crossing the $10 billion mark for the first time and the operating profits reached over $1 billion for the quarter. Revenue for the Google services also went up by 12% year-over-year to reach $73.9 billion.
An overall strong revenue growth resulted in the net income growing to $23.6 billion during the quarter with free cash flow generation of $13.5 billion. This strong financial position of the company provides significant growth opportunities for its autonomous vehicle subsidy, Waymo. Alphabet Inc. (NASDAQ:GOOG) allocated $5 billion worth of funds for Waymo to support its ongoing operations, thereby indicating management’s commitment to the cause. Waymo is now delivering over 50,000 weekly paid public rides in San Francisco and Phoenix, with testing ongoing in the Bay Area.
The company has a history of growth. It has been able to grow its top-line and bottom line by 18% and 21%, respectively over the last decade. 62 analysts have a consensus Buy rating on the stock, with their median price target of $205 presenting an upside of 24% from the current level.
Patient Capital Opportunity Equity Strategy 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.
