4. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 216
Alphabet Inc. (NASDAQ:GOOGL) is a technology conglomerate that holds a majority stake in Google, managing its diverse range of businesses, which include Google Search, Google Cloud, YouTube, Waymo, and Verily, with a primary focus on innovation and organizing the world’s information, making it universally accessible and useful.
Google Cloud revenue increased by 28.8% in the second quarter of 2024, contributing to a 13.59% overall revenue growth. Google’s ad revenue increased to $48.5 billion in Q2, accounting for almost 60% of the company’s sales for the quarter. Besides Google, YouTube’s ad sales increased to $8.7 billion. Net income was $23.6 billion.
In October, Google, along with Amazon and Microsoft, is investing in nuclear power to meet the growing energy demands of their data centers, fueled by the expansion of AI services. These tech giants are seeking clean energy alternatives to reduce their carbon footprints and support their sustainability goals. Nuclear power is seen as a promising option due to its reliability and ability to provide large-scale energy production.
The company’s ambitious future is further strengthened as we see that Bill Ackman, a renowned investor, has invested over 20% of his portfolio in Alphabet Inc. (NASDAQ:GOOGL). Wall Street analysts are also bullish on Alphabet Inc. (NASDAQ:GOOGL), predicting a 20% increase in its stock price within the next year.
AI infrastructure and GenAI tools have generated billions in revenue year-to-date, used by over 2 million developers. Google, dominating the search engine market (91.06%), plans to invest $50 billion in AI by 2024. Alphabet Inc.’s (NASDAQ:GOOGL) dominance in search, growing cloud business, and AI investments position it for continued success. Strong financials and positive analyst sentiment make it a promising investment option.
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.”
