We recently published a list of 10 AI Stocks Everyone is Talking About These Days. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against other AI stocks everyone is talking about these days.
President Donald Trump’s $500 billion investment plan to build AI infrastructure, Stargate, is making waves as analysts believe the project provides a new growth catalyst for major tech companies. Sasha Ostojic, Playground Global venture partner, said in a latest program on CNBC that the plan is just the beginning of AI “renaissance” in the country:
“Stargate is just the beginning, I think, of this renaissance of AI technology in this country, even though it seems like we’ve been in it for a few years. And, you know, it reminds me of the Apollo program from the 50s and 60s. In that case, it was a government-run program that created a bunch of technology, propelled the world forward, created a bunch of companies, and set us up for a lot of prosperity in the decades to follow.”
Ostojic also talked about the Jensen Huang-led company and said its stock has been going “sideways” and the market is waiting for the next big “trigger.” He is bullish on the company and thinks the $500 billion plan with the company at its center could be the next growth catalyst investors were waiting for.
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For this article, we picked 10 AI stocks currently trending on the back of the latest news. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A laptop and phone open to Google’s services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
Jessica Inskip from StockBrokers.com recently said in a program on Schwab Network that Alphabet Inc. (NASDAQ:GOOG) is one of her top picks for 2025 because of several factors. Here is how she explained her bull thesis:
“This is going to be one of my top stock picks of the year thus far, and it goes again with that AI narrative and the AI ecosystem. The next leg that I see coming is actually AI agents. There are lots of resources and next-gen assistants, and even this Vertex AI Agent Builder that Google—or Alphabet Inc. (NASDAQ:GOOG), has, which is going to lead that initiative and make it easier for enterprises.
We still need that Nvidia chip, and there’s still this interconnectivity among the hyperscalers, but I think AI agents are what we’re going to see transform. That’s really my theme from the AI lens for 2025, and I put Google at the forefront of that.”
The market has been ignoring Alphabet Inc. (NASDAQ:GOOGL)’s key secondary businesses and the stock remains undervalued despite concerns around AI search and regulatory onslaught.
Alphabet Inc. (NASDAQ:GOOGL)’s secondary ventures in AI, autonomous driving, and other areas are making solid progress, especially in the Waymo robotaxi segment. With the 2025 EPS forecast at around $9, Alphabet (NASDAQ:GOOGL) could realistically achieve earnings closer to $10 if it maintains its historical outperformance rate. At a projected $10 EPS, Google’s forward P/E multiple would be approximately 17, a relatively low valuation for a diversified market leader.
What are the key drivers for Alphabet (NASDAQ:GOOGL)?
Alphabet Inc. (NASDAQ:GOOGL) remains on track to reach a $100 billion revenue run rate from YouTube Ads and Google Cloud by the end of 2024. In its autonomous driving division, Waymo has shown notable progress, with paid autonomous rides growing 200% quarter-over-quarter to 150,000 weekly rides as of late October, thanks to a fleet of 700 vehicles in service since August.
This growth is significant: Waymo vehicles now average about 30.6 autonomous rides per day—substantially higher than Uber’s average of 4.18 rides per driver daily, based on Uber’s 31 million daily trips and 7.4 million drivers last quarter. This performance underscores Waymo’s competitive edge in autonomous ride volume compared to traditional ride-hailing.
Google Cloud has been expanding steadily, with revenue climbing from $13.06 billion in 2020 to $33.09 billion in 2023. Notably, Google Cloud turned profitable for the first time in 2023, posting $1.72 billion in operating profit—a significant improvement from a $5.61 billion loss in 2020. This segment’s performance continues to strengthen, with the latest quarterly revenue reaching $11.35 billion, up 35% from $8.41 billion in the same period last year.
RiverPark Large Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q3 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG): Google was our top detractor in the third quarter despite reporting second quarter results that were generally in line with expectations. The company reported slightly better revenue growth in Search, which grew 14% and continues to be resilient in the face of AI challengers, and Google Cloud, which grew 29% in the quarter. Service operating income margins of 40% and Cloud operating income margins of 11% were also both ahead of investors’ expectations as management’s cost-efficiency efforts drove operating leverage. YouTube revenue growth was slightly below expectations (+13% v. +16%) driven by tougher year-over-year comparisons and some general weakness in the Brand Advertising vertical. Finally, Cap Ex in the quarter of $13.2 billion was more than expected and likely the driver of the weakness in the stock as investors grapple with how much infrastructure investment will be required to achieve Google’s AI goals.
Overall, GOOG ranks 2nd on our list of AI stocks everyone is talking about these days. While we acknowledge the potential of GOOG, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOG 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 is originally published at Insider Monkey.
