We recently published a list of 7 Best Money Making Stocks To Buy Now. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against other best money making stocks to buy now.
The US markets have been on a stellar run over the past couple of years, with two-year gains of 53%. This is the best performance for the broad market index since the 66% rally between 1997 and 1998.
READ ALSO: 15 Stocks ChatGPT Predicts Could Make You Wealthy in 10 Years and 12 Best S&P 500 Stocks to Invest in According to Analysts.
The stock market has benefited from waning inflation, declining interest rates, and a resilient economy that has avoided recession. While continued growth is projected for 2025, analysts also warn of the rally having gone too far, with a correction in the offing this year. Moreover, the looming threat of fierce trade wars is already taking a toll on investor sentiment.
The broad market index fell for the fourth successive day on Tuesday, February 25, slipping 0.47% amid heightened concerns about economic growth and global trade. According to CNBC, investors are turning to US bonds, with treasury yield dropping below 4.3% to touch the lowest level since December.
The US president has announced that tariffs on Canada and Mexico will begin next month, ending the month-long suspension. The new administration also recently imposed additional 10% tariffs on Chinese goods and continues to warn the European Union of similar import taxes, citing the bloc’s treatment of Washington.
Protectionist policies have sparked market concerns about which countries will be next on the American president’s list, leaving several large multinationals unsure of how to plan. Past trends show that the broad market index dropped by 5% on days when the US, under Trump’s first stint as president, announced tariffs in 2018 and 2019. The index fell by a cumulative 7% when other countries imposed retaliatory tariffs.
The recent consumer confidence survey for February has added to the negative mood, with results coming in weaker than economists’ estimates and registering the largest deterioration since August 2021. This is the third straight monthly decline, pushing the index to 98.3%, its lowest since June 2024.
Stephanie Guichard, senior economist of global indicators at The Conference Board, stated the following about the dip:
Of the five components of the Index, only consumers’ assessment of present business conditions improved, albeit slightly. Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.
Methodology
For this article, we sifted through screeners to identify stocks with a market cap of over $2 billion (mid-cap or above), whose ROE was greater than 30%, and ROI of more than 25%, as of the close of business on February 25. From there, we selected the 7 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 1,000 prominent hedge funds as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A laptop and phone open to Google’s services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG)
Market Cap: $2.15 trillion
ROE: 32.91%
ROI: 28.68%
Number of Hedge Fund Holders: 174
Alphabet Inc. (NASDAQ:GOOG) owns several notable platforms such as Google Search, Google Maps, Gmail, and YouTube. The company is also known for pioneering work and research in cloud computing, quantum computing, and artificial intelligence. It is on the fourth spot in our list of the best money making stocks to buy now.
During the Q4 2024 earnings call on February 4, Alphabet Inc. (NASDAQ:GOOG) reported a quarterly revenue of $96.47 billion, up 12% year-over-year, driven by strong momentum across the business. Total operating income increased 31% during the quarter while operating margin rose by five percentage points to 32%. Net income surged 28% from last year to $26.54 billion. EPS stood at $2.15, representing a 31% growth compared to Q4 2023 and beating estimates by two cents.
Robust results in Q4 have raised investor confidence in the stock. The London Company Large Cap Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
Alphabet Inc. (NASDAQ:GOOG) – GOOG was a top performer this quarter reflecting strong results from its ad business, Cloud growth, and margin enhancements. Investors got some clarity on the antitrust lawsuits during the quarter, but potential outcomes from these cases remain uncertain. Margins in the core business continue to improve, and growth in the Cloud business accelerated. Management has executed its expense control plans and expanded margins through better product and process organization. GOOG has a solid balance sheet, significant market share, and generates strong returns on invested capital.
Another driver of positive momentum for Alphabet Inc. (NASDAQ:GOOG) has been the recent launch of its latest quantum computing chip, called Willow, which is expected to be useful for large-scale simulation and code-breaking when quantum computing matures. The technology will help reduce errors exponentially as it scales up using more qubits. Industry experts describe this as a major breakthrough that has been pursued for nearly three decades.
Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of over 22%. According to Insider Monkey’s database for Q4 2024, 174 hedge funds held a stake in the company.
Overall, GOOG ranks 4th on our list of best money making stocks to buy now. While we acknowledge the potential of GOOG as an investment, our conviction lies in the belief that 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.
