12 Best Technology Stocks to Invest In for the Long Term

4. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 202

Alphabet Inc. (NASDAQ:GOOGL) is a technology company with a diverse portfolio that includes Google Search, Maps, YouTube, Cloud, and Waymo. In Q3 2024, its performance was driven by increased demand for search and cloud services that were fueled by AI advancements.

Google Search maintains a 90% global market share and generated over 74% of the company’s revenue in the third quarter. The company’s continued investment in AI, exemplified by Gemini and its integration across products, positions it for long-term growth. By Q3 2024, all products with over 2 billion monthly users used Gemini models. The CEO emphasized that AI solutions are driving deeper product adoption among existing customers, attracting new clients, and securing larger contracts.

Investments in AI are seen as one of the factors that have resulted in substantial free cash flow into Google’s core search advertising business, which has reached $55.8 billion over the past 12 months. Analysts remain bullish on its future, acknowledging its effective navigation of the evolving AI landscape.

Qualivian Investment Partners highlighted the company’s strong second-quarter results, driven by core business growth, despite YouTube ad deceleration. While AI investments are significant, there’s confidence in its long-term growth potential. Here’s what it said 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.”