1. Alphabet Inc. (NASDAQ:GOOGL)
TTM Net Income: $100 billion
Number of hedge funds: 160
Alphabet Inc. (NASDAQ:GOOGL), with $100 billion in profits tops this list. It is the parent company of Google and a pioneer in internet-related services and products, including online advertising technologies, search engines, cloud computing, software, and hardware. The company is also a leading investor in data centers and fiber networks, operating a vast global network of data centers that support its cloud services and other digital offerings. Alphabet Inc. (NASDAQ:GOOGL) has an operating margin of 32% and a net profit margin of 29%.
Alphabet Inc. (NASDAQ:GOOGL) continues to strengthen its position in the cloud computing market, which has experienced rapid growth in recent years and is expected to expand significantly in the coming years. The company has been heavily investing in expanding its data center infrastructure to meet the increasing demand for its Google Cloud services. With a focus on AI and machine learning, Alphabet Inc. (NASDAQ:GOOGL) is well-positioned to capitalize on the growing need for data processing and storage solutions. The company continues to report strong operating performance with strong growth in cloud revenue, driven by the integration of AI, which is attracting new customers and larger deals. YouTube revenue also continues to show healthy growth. However, Alphabet’s dominance is also subject to regulatory challenges, such as anti-trust lawsuits, which remain a risk.
Alphabet Inc. (NASDAQ:GOOGL) delivered solid Q4 2024 results, although the growth trajectory has decelerated, raising some concerns. The company’s total revenue increased by around 12% YoY, compared to over 13% growth in Q4 2023. Additionally, growth in the search, YouTube ads, and cloud businesses was slower compared to the same quarter last year. Notably, the company announced its plans to invest $75 billion in 2025 to enhance its AI strategy and infrastructure, which was much higher than street expectations of around $60 billion.
Dan Flax, a senior analyst at Neuberger Berman, commented on the results, noting short-term market concerns about the capital expenditure. However, he views the capex as a wise long-term strategic move due to capacity constraints that are hindering the cloud business. Flax stated that Alphabet’s various businesses are still performing well, and AI is enhancing the value proposition for customers. He believes Alphabet Inc. (NASDAQ:GOOGL) remains well-positioned and finds the stock attractive at current levels.
While we acknowledge the potential of GOOGL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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