12 Best Growth Stocks to Buy According to Hedge Funds

4. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 216

Successful companies have come together to form Alphabet Inc. (NASDAQ:GOOGL). Featuring products spanning from advertising to cloud computing and self-driving cars, the company has evolved into a true technical behemoth, generating tens of billions of dollars in free cash flow annually. Investors remain optimistic about the firm’s overall strength and anticipate the US-based tech giant to maintain its leadership position in several areas, including search, artificial intelligence, cloud computing, and video, despite antitrust concerns surrounding its significant search business.

Tensor Processing Units (TPUs) and Google Cloud act as facilitators, while the Gemini project boosts intelligence, according to UBS research, which positions Alphabet Inc. as a significant player in AI. The company will therefore be well-positioned to benefit from the projected $1.2 trillion AI market by 2027.

GOOGL introduced the Google Renewable Energy Addendum to encourage suppliers to acquire all of their energy from renewable sources by 2029. This is in line with Google’s 2030 goal of net-zero emissions and a 50% reduction in emissions from Scope 1, 2, and 3 over 2019 levels.

In Q2 2024, Alphabet Inc. (NASDAQ:GOOGL) posted outstanding results, with revenue up 15% and diluted EPS jumping 31% YoY. Google Cloud Platform (GCP) continued to dominate the cloud industry with YoY growth of about 29%.

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.”

Out of around 900 hedge funds we tracked, Davide Erro’s Turiya Advisors is the largest shareholder in the firm, with 603,000 shares worth $109.84 million.