We recently compiled a list of the 20 High Growth Mega Cap Stocks You Can Buy And Hold For Next 5 Years. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against the other high growth mega cap stocks.
Exactly 5 years ago, the world struggled to deal with a black swan event: the COVID-19 pandemic. There was so much uncertainty that people didn’t even know if they’d be alive in the next few weeks, let alone figure out where the market was heading. Anyone who invested in the S&P 5 years ago would have gained 83%. If you had bought at the exact bottom, you’d have gained twice that amount.
What the above proves is that the present isn’t necessarily an indicator of what the future holds. All companies that had their workflows disrupted have recovered, some more than others. Some companies have strengthened their supply chains. Others have improved their work-from-home capabilities. Industries like airlines and restaurants have modified their business models to cater to the new dynamics.
These companies have been able to deal with the changing dynamics because of their financial strength and innovation. A company’s past performance and its finances give a good idea of whether it will be able to survive bad times. That’s why when we look at the best mega-cap stocks to hold for the next 5 years, we look at how well they have grown in the last 5 years.
To come up with our list of top 20 mega-cap stocks to hold for the next 5 years, we considered stocks with a market cap of at least $200 billion and a 5-year sales growth rate of at least 10%.
A user’s hands typing a search query into a Google Search box, emphasizing the company’s search capabilities.
Alphabet Inc. (NASDAQ:GOOGL)
Alphabet Inc. (NASDAQ:GOOGL) is a platforms and products provider that operates in Google Cloud, Google Services, and Other Bets segments. Its products and services include Chrome, Google Drive, YouTube, AI infrastructure, data and analytics, and others. The company has grown its revenue by 17.30% over the last 5 years.
GOOGL’s stock price faced a decline after it released Q4 earnings results which were below estimates. Though the company recorded a 13% YoY increase in revenue, it was $200 million less than expectations. Despite that, the company continues to be a leader in tech, especially emerging AI technologies. Even though DeepSeek AI has rattled some investors since last month, the firm’s superior tech should be able to beat any similar competition to maintain its lead.
Alphabet Inc. (NASDAQ:GOOGL) also started paying dividends the previous year and also paid off some debt. Last year the company generated $72.764 million of free cash flows and distributed almost 100% of its FCF in the form of dividends and buybacks. It holds a dominant market position and the short-term downturn in the stock price should be taken as a rewarding opportunity, especially by the dividend growth investors. If the growth slows down, investors can rely on the management’s willingness to share profits with the shareholders, keeping the downside limited.
Overall GOOGL ranks 15th on our list of the high growth mega cap stocks you can buy and hold for the next 5 years. While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.