Goldman Sachs’ List Of Stocks That Hedge & Mutual Funds Love & Hate: 28 Stocks On The Mutual and Hedge Funds Radar

14.  Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders In Q2 2024: 165

Category: Most popular with HFs and underweight among mutual funds

Alphabet Inc. (NASDAQ:GOOG) is a mega cap technology giant. It is a well diversified technology company that continues to depend on the search engine business for most of its revenue. Alphabet Inc. (NASDAQ:GOOG)’s resources, as evidenced by $111 billion in cash and equivalents have also enabled it to establish a leading role in the global AI industry. So much so that not only does it have access to a foundational AI model through Gemini, but unlike some other major AI players, Alphabet Inc. (NASDAQ:GOOG) is also able to offer AI computing resources to other companies courtesy of its tensor processing unit (TPU) chips. These make it a diversified company, and the firm is expanding its AI plans by aiming to build 1GW AI data centers powered by nuclear and other renewable energy sources. However, potential headwinds from the DOJ accelerating its action against the firm or by AI creating new avenues for search remain.

Patient Capital Management mentioned Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter. Here is what the fund said:

“Alphabet Inc. (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.”