We recently published a list of 12 Best NASDAQ Stocks To Buy in 2025. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against other best NASDAQ stocks to buy in 2025.
As 2025 began, King Lip, chief strategist and partner at BakerAvenue Wealth Management expressed his bullish outlook for tech stocks in 2025 during a CNBC interview. He underscored a strong belief in the continued outperformance of tech stocks in 2025, driven by robust earnings growth and ongoing investments in AI infrastructure. Here’s a short excerpt from our article on the 12 Best Technology Stocks to Invest In for the Long Term that covered this:
“…Lip was against the prevailing sentiment among investors that big tech has peaked and that funds should rotate into smaller stocks or other themes. He argued that the recent weakness in the tech sector is largely due to technical rebalancing rather than a fundamental downturn. He emphasized that cash is likely to flow back into leading tech stocks, as they are projected to deliver the highest earnings growth in 2025, with an anticipated earnings increase of over 20%.”
While acknowledging the high valuations of many tech stocks, he argued that they remain within acceptable historical norms. On January 9, Mark Avallone, president at Potomac Wealth Advisors, joined ‘The Exchange’ on CNBC to discuss why technology is the best sector to invest in right now. He asserts that above-target inflation will prevent the Fed from implementing further easing measures, countering the notion that higher rates are detrimental. He noted that market rates have surged to all-time highs, with a significant increase of 1,800 points since October 2023. Avallone emphasizes that tech stocks, particularly cash-flowing mega-cap and large-cap companies, have shown resilience against rising rates, attributing this to improved operational efficiencies and ongoing technology spending even in a slowing economy.
Avallone highlighted recent deal chatter in the tech sector, including Shutter Stock’s potential acquisition in the uniform space, reflecting growing interest in technology-driven solutions. He is optimistic about the incoming administration’s impact on economic efficiencies and stock performance, particularly for large-cap tech firms and mid-cap companies focused on innovation. He views Hilton favorably for its technological advancements in office management and cost efficiency. In the defense sector, he expressed confidence in Boeing’s growth potential, emphasizing that significant cuts to defense spending are unlikely and that advancements in tech will enhance military capabilities.
Methodology
We first sifted through the Finviz stock screener to compile a list of the top 20 NASDAQ for 2025. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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 user’s hands typing a search query into a Google Search box, emphasizing the company’s search capabilities.
Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is a technology conglomerate with a diverse portfolio of businesses, including Google Search, YouTube, and Google Cloud. In Q3 2024, the company demonstrated an increased demand for its search and cloud services, due to the advancements in AI.
Google Search maintains a 90% global market share and generated ~74% of the company’s total revenue in Q3 2024. Its ongoing investments in AI, which can be highlighted by the Gemini models integrated across its products, position it for long-term growth. By the third quarter, all products with over 2 billion monthly users utilized Gemini models.
The CEO Sundar Pichai noted that AI solutions are enhancing product adoption among existing customers, attracting new clients, and securing larger contracts. He outlined plans to accelerate AI product launches in 2025 and emphasized the potential of the Gemini AI model to reach 500 million users. Gemini 2.0 Flash is now widely available to developers. With AI expected to drive a projected $200 billion market by 2026, the company’s focus on AI innovation solidifies its competitive edge.
Citi’s Ronald Josey has a Buy rating and a $232 price target on Alphabet Inc. (NASDAQ:GOOG). Google is facing legal challenges from the government over its dominance in online search. While Google disagrees with the court’s decision and plans to appeal, it has proposed a solution to address the concerns. Investments in new technologies, such as Gemini 2, showcase that the company is still focused on innovating and improving its products.
Here’s what Qualivian Investment Partners said regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2024 investor letter, highlighting the company’s strong second-quarter results:
“Alphabet Inc. (NASDAQ:GOOGL): Q2 2024 revenues and EPS beat expectations, with total revenues growing 14%, Search ad revenues growing 14%, YouTube ads growing 13%, and Google Cloud revenues growing 29%. Revenue growth in the quarter constituted a continued sequential improvement from earlier quarters in the year, suggesting a continued rebound in Alphabet’s core business except for YouTube ad revenues, which missed expectations and showed deceleration in the growth rate as compared to Q1 when it grew 21%. Operating margins improved by 310 bps vs. the same quarter last year.
Management continued to highlight developments with their generative AI program, which is seen as a foundational platform with opportunities across their businesses but particularly in search and cloud. However, this comes with material capex investment well ahead of the expected economic benefits from Gen AI, and the level of spending is leading investors to worry about the ROI on that spend for Alphabet, as well as the other hyperscalers (Microsoft and Amazon). We continue to have confidence in Alphabet’s ability to generate strong revenue, earnings, and cash flow growth well above the S&P 500’s in the years to come and view it as a core holding for the long term.”
Overall, GOOGL ranks 4th on our list of best NASDAQ stocks to buy in 2025. While we acknowledge the growth potential of GOOGL, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOGL 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.
