4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 214
Alphabet Inc. (NASDAQ:GOOGL) is heavily focused on machine learning and many of its subsidiaries have integrated machine learning across their products and services. Google Brain, part of DeepMind now, is focused on machine learning and AI. The company’s AI research division has made advancements in applications of AI in the early detection of cancer and also reinforcement learning. Alphabet Inc.’s (NASDAQ:GOOGL) Google also offers the Google Cloud Platform, one of the top platforms used by AI developers and enterprises worldwide to manage ML workflows and deploy models at scale.
According to Insider Monkey’s database, Alphabet Inc. (NASDAQ:GOOGL) was part of 214 hedge funds’ portfolios with positions worth $28.79 billion in the fourth quarter of 2023. This is compared to 221 funds in the third quarter with a total stake of $26.158 billion.
On April 4, Reuters reported that Alphabet Inc. (NASDAQ:GOOGL) is considering to acquire HubSpot, Inc. (NYSE:HUBS) in a mega deal. While neither the company nor HubSpot, Inc. (NYSE:HUBS) has made an official comment about the deal, the company met with investment bankers from Morgan Stanley (NYSE:MS) to gauge what antitrust regulators would do and determine how much to offer. As of April 8, HubSpot, Inc. (NYSE:HUBS) has a market capitalization of $33.714 billion.
Pershing Square Holdings stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its fourth quarter 2023 investor letter:
“In early 2023, we initiated an investment in Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, at a highly attractive valuation during a period when apprehension about the company’s competitive positioning in AI overshadowed the high-quality nature of its business and strong growth prospects.
Since we initiated our position, the company has delivered impressive operating results. With two of the highest ROI and most resilient ad formats in Search and YouTube, Google occupies a dominant position in the secularly fast-growing digital advertising market. As the digital advertising market recovered over the course of the year, revenue growth in Google’s advertising business accelerated from 3% in Q1 2023 to 10% in Q4 2023. Moreover, the company realized significant progress on its substantial margin expansion opportunity and maintained a robust capital return program. In 2023, operating profit margins expanded by approximately 225 basis points (bps), excluding one-time severance and real estate charges, as the Cloud segment reached breakeven profitability. We expect continued cost control, automation efficiencies, and operating leverage in under-earning segments (Cloud & YouTube) to sustain margin expansion as Google invests behind AI initiatives.
The company is using its ample free cash flow to repurchase approximately 4% of its outstanding shares on an annual basis…” (Click here to read the full text)
