1) Alphabet Inc. (NASDAQ:GOOGL)
Bridgewater Associates’ Stake Value: $827,010,363
Number of Hedge Fund Holders: 216
Forward P/E Ratio as of 4 October: 18.94x
Wall Street believes that Alphabet Inc. (NASDAQ:GOOGL)’s growth momentum is expected to be aided by Google’s Search and Cloud services. Moreover, its innovation in Al and infrastructure leadership should continue to aid its revenues and earnings. The company remains focused on re-engineering its cost base.
The analysts have seen positive trends throughout the engagement, Al-embedded Search, and GCP. Experts opine that ads business momentum and the growth of its subscriptions business should continue to act as principal tailwinds. Investments will be made towards technical infrastructure and cloud growth.
Alphabet Inc. (NASDAQ:GOOGL)’s strong competitive positioning, supplemented by its dominant core search business, is expected to further strengthen user inclination moving forward. The company’s prospects are further cemented by its potential to lead in consumer Al assistant use, considering the widespread global device presence. Alphabet Inc. (NASDAQ:GOOGL)’s prowess in Al and its financial strength enable it to provide greater financial incentives to handset manufacturers to go for default Al placement.
Wall Street believes that Alphabet Inc. (NASDAQ:GOOGL) remains well-placed to achieve healthy financial growth and generate a reasonable Al return on invested capital (ROIC), even if the development of Al revenue-generating applications might take longer than expected. Recently, the company highlighted that new products and features in Google Cloud and YouTube continue to attract partnerships and increase paid subscribers.
Wolfe Research initiated coverage on the shares of Alphabet Inc. (NASDAQ:GOOGL) on 16th July. The firm gave an “Outperform” rating with a price target of $240.00.
Patient Capital Management, a value investing firm, released its second quarter 2024 investor letter. Here is what the fund said:
“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.”
While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
