10 Best Stocks to Invest in According to Billionaire Cliff Asness

8. Alphabet Inc. (NASDAQ:GOOGL)

AQR Capital Management’s stake as of Q3: $582.5 million

Alphabet Inc. (NASDAQ:GOOGL) is a prominent name in technology. Through its various offerings, such as Google Cloud and Google Services, the company leads several market divisions. Its primary products—such as Search, YouTube, Android, Chrome, and advertising services—dominate their respective markets, driven by advanced innovations in artificial intelligence.

In light of possible antitrust sanctions that might affect Google’s search distribution and earnings in the United States, JMP Securities lowered the GOOGL stock from Market Outperform to Market Perform on January 2. There have been some concerns around the stock’s ability for multiple expansion due to uncertainty around a court decision that is expected to come in August.

Yet September 2024 earnings for Alphabet Inc. (NASDAQ:GOOGL) showed record revenue, reaching $88.3 billion during the quarter. Google Advertising generated $65.9 billion, making up more than 74% of the company’s total revenue. In order to meet investor expectations for returns on its substantial AI investments, the company is improving its monetization strategies with tools such AI Overviews.

Qualivian Investment Partners stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOGL): Q2 2024 revenues and EPS beat expectations, with total revenues growing 14%, Search ad revenues growing 14%, YouTube ads growing 13%, and Google Cloud revenues growing 29%. Revenue growth in the quarter constituted a continued sequential improvement from earlier quarters in the year, suggesting a continued rebound in Alphabet’s core business except for YouTube ad revenues, which missed expectations and showed deceleration in the growth rate as compared to Q1 when it grew 21%. Operating margins improved by 310 bps vs. the same quarter last year.

Management continued to highlight developments with their generative AI program, which is seen as a foundational platform with opportunities across their businesses but particularly in search and cloud. However, this comes with material capex investment well ahead of the expected economic benefits from Gen AI, and the level of spending is leading investors to worry about the ROI on that spend for Alphabet, as well as the other hyperscalers (Microsoft and Amazon). We continue to have confidence in Alphabet’s ability to generate strong revenue, earnings, and cash flow growth well above the S&P 500’s in the years to come and view it as a core holding for the long term.”