Billionaire Ray Dalio’s Top 5 Technology Stock Picks

1. Alphabet Inc. (NASDAQ:GOOG)

Bridgewater Associates’ Stake Value: $140,194,000

Percentage of Bridgewater Associates’ 13F Portfolio: 0.70%

Alphabet Inc. (NASDAQ:GOOG) is a technology powerhouse that continues to dominate in search, advertising, and AI. As of September 30, Bridgewater Associates has stakes worth $140.19 million in Alphabet Inc. (NASDAQ:GOOG) and the investment covers 0.70% of the fund’s 13F portfolio. The stock is one of Ray Dalio’s top technology stock picks and also among his top 13F holdings.

This October, KeyBanc analyst Justin Patterson revised his price target on Alphabet Inc. (NASDAQ:GOOG) to $120 from $125 and reiterated an Overweight rating on the shares.

Alphabet Inc. (NASDAQ:GOOG) is a company with a track record of outperformance and delivering shareholder value. The company has free cash flows of $62.5 billion. Moreover, the company has a trailing twelve-month operating margin of 27.85% and an ROE of 26.89%. Alphabet Inc. (NASDAQ:GOOG) also has low debt levels and according to its balance sheet, the company has a debt-to-equity ratio of 0.05, as of September 30.

Here is what Mayar Capital had to say about Alphabet Inc. (NASDAQ:GOOG) in its third-quarter 2022 investor letter:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)

You can also take a look at Biggest ESG Companies in the World and 15 Most Valuable NASDAQ Companies.

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