Harvard University Stock Portfolio: Top 10 Stock Picks

2. Alphabet Inc. (NASDAQ:GOOGL)

Harvard Management Company’s Stake: $198.1 million

Alphabet Inc. (NASDAQ:GOOGL) is a leading technology company with a diverse portfolio, including Google Services, Google Cloud, and Other Bets. The company offers products such as ads, Android, Chrome, Search, and YouTube, maintaining dominance in the search market while leveraging artificial intelligence to enhance user experiences.

On October 29, Alphabet Inc. (NASDAQ:GOOGL) reported its third-quarter results for fiscal 2024. The company saw a 15% year-over-year increase in consolidated revenue, reaching $88.3 billion. A key driver of this growth was the Google Cloud segment, which includes Google Workspace. Revenue from Google Cloud surged 35% year-over-year, primarily fueled by AI infrastructure and generative AI solutions within Cloud Platform services.

BMO Capital Markets raised its price target for Alphabet Inc. (NASDAQ:GOOGL) to $217 from $215, maintaining an Outperform rating on the stock. This adjustment reflects the company’s strong performance across its business segments. BMO’s analysis noted the acceleration in Alphabet’s cloud revenue and highlighted the company’s successful search monetization efforts. Additionally, the growth of AI Overview Ads on mobile is expected to drive further expansion, with a global rollout anticipated after 2025.

Cooper Investors Global Equities Fund (Hedged) stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2024 investor letter:

“Alphabet Inc.’s (NASDAQ:GOOGL) operating performance remains strong with sales growing 14% in the most recent quarter. Highlights included the ongoing secular growth of digital advertising driving Google search (+14%), YouTube’s continued success as a leading content platform (+13%) and the performance of the Cloud business (+29%). In conjunction with this strong sales momentum, Alphabet’s increased focus on expenses is delivering margin expansion such that Operating Income grew 26%.

Despite this operational momentum, Alphabet’s share price declined 11% in the quarter as a federal judge ruled against the company in its case with the US Department of Justice. The case pertains to Google’s monopolisation of both the search and digital advertising markets which is claimed to limit competition and innovation and/or in

Potential remedies include prohibiting exclusive agreements which make Google the default search engine on Apple or Samsung devices, forcing Alphabet to share its advertising technology with rivals, or in the extreme breaking the company apart. The timing and outcomes remain somewhat uncertain however we remain of the belief that at the fundamental level Alphabet’s products are best of breed across several verticals and are  benefitting from secular industry trends and that these factors will be the ultimate determinant of long-term shareholder returns.”