We recently compiled a list of the 10 Best NASDAQ Stocks To Invest In Right Now. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against the other NASDAQ stocks.
This year has been a healthy year for the American stock market, fueled by a strong performance from technology stocks. Several indices capped their best week of the year in early September as stocks rose ahead of the Federal Reserve meeting where the central bank was expected to cut interest rates. NASDAQ has led the charge and registered a 20% growth during the first half.
While the index lists over 3,100 companies from various sectors, the rally has been led by its top seven holdings which account for 52% of the index. All of them being tech stocks. There is a mix of optimism and skepticism among investors on whether NASDAQ will be able to continue its good run over the second half of the year. Historical data over the past decade shows that in most instances, NASDAQ has finished stronger during the back half of the year. There have only been two years between 2014 and 2023 during which NASDAQ’s year-end returns were lower than first-half returns.
However, Fundstrat Global Advisors’ Tom Lee, who is generally bullish on the stock market, told CNBC earlier this month that investors need to be cautious, as stocks could fall 10% during the next eight weeks amid interest rate cuts and the nervousness around the upcoming presidential elections. The co-founder of the research firm also suggested that if the dip is too strong, it should be viewed as a buying opportunity for investors. Lee has largely been on the money and nailed most stock calls this year.
Other analysts also anticipate market volatility ahead of the presidential elections. Liz Young Thomas, the head of investment strategy at SoFi, while talking to Business Insider noted that stock activity lags between June and August while traders are on vacation. This results in strong market performance aided by thinner trade volumes. The activity jumps up significantly in September when they return to their desks, which often leads to stock price volatility. According to her, a two percent shift in share price in either direction has become the norm in September. However, during election years, the volatility is at its peak in mid-October instead of September, and the market returns to normalcy after the results are announced.
LPL Financial’s Adam Turnquist also expects seasonal shakiness in the months ahead, but pointed out, like Lee did, that the dip presents an opportunity to buy when the share is trading low and earn high returns when the market stabilizes.
Buying the September or October lows has been a very good trade. October, things start to improve, and then you have this November, December, year-end rally, typically very high average returns and high positivity rates for those months.
Both Turnquist and Young Thomas agreed that existing portfolios should not be readjusted because of seasonal volatility because it is short-term and hard to forecast.
With that said, let’s head over to see some of the best NASDAQ stocks to buy right now, given the current trends and future projections.
Methodology
We scanned Insider Monkey’s database of 912 hedge funds for the second quarter of 2024 to look for stocks listed on NASDAQ and picked the top 10 companies with the highest number of hedge funds having stakes in them. We ranked them in ascending order of hedge fund holders in each company.
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 laptop and phone open to Google’s services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 165
Alphabet Inc. (NASDAQ:GOOG) is an American technology giant headquartered in Mountain View, California. It owns a wide range of products and platforms, such as Google Search, Google Maps, Google Cloud, Gmail, Chrome, YouTube, and more. It is one of the world’s largest tech companies by revenue.
According to Insider Monkey’s database, 165 hedge funds had stakes in the company as of Q2 2024, making it one of the best NASDAQ stocks to invest in right now. During the second quarter of the year, the company reported EPS of $1.89, beating expectations of $1.85 per share. Consolidated revenues totaled $84.7 billion, up 14% year-over-year. Net income was recorded at $23.6 billion. These robust results were led by a strong performance from Google Search and Google Cloud.
Alphabet Inc. (NASDAQ:GOOG)’s Cloud business crossed the $10 billion quarterly revenue mark for the first time and posted $1 billion in operating profit – which was also a first. Revenues within Google Services reached $73.9 billion, up from $66.2 billion during the same quarter in 2023. The ‘Google Search & Other’ segment revenue totaled $48.5 billion, while YouTube and Google Network generated $8.7 billion and $7.4 billion, respectively, in revenues during the quarter. These results reflect the fast pace of growth in the company and have helped garner investor confidence. The London Company Large Cap Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:
Alphabet Inc. (NASDAQ:GOOG) – GOOG was a top performer this quarter as it reported strong Search revenue, tighter cost controls, and momentum in Cloud. Both direct and brand Search ads were better than expected and the strength in YouTube monetization continues. Expense controls have translated to 700bps of margin improvement. Management is removing layers to improve efficiency, which should drive margins higher. GOOG also provided details on paths to monetize Al for advertisers. GOOG initiated a dividend during the quarter to return additional cash to shareholders. It has a solid balance sheet, a significant market share, and generates strong returns.
The future outlook for the company looks solid, with consensus among analysts on the stock’s Buy rating. It also has a share price target of $198, representing a 21% upside from its current level. There are also reports of Alphabet Inc. (NASDAQ:GOOG) negotiating a $23 billion acquisition of Wiz, a cybersecurity firm, that offers AI automation of tasks, threat detection, and vulnerability analysis. If the deal goes through, it will open the doors for the company in the cloud-native security arena by boosting its Mandiant cybersecurity platform.
However, a recent defeat in an anti-trust lawsuit, where the Federal Court judge called Alphabet a ‘monopoly’ has come as a setback for the company. Judge Amit Mehta ruled that Alphabet stifled competition in the online search market to maintain its monopoly. This has led to some bearish sentiment around the stock, as it has hurt the company’s reputation and can also result in billions of dollars in hefty fines or legal settlements.
Overall GOOG ranks 6th our list of the best NASDAQ stocks to invest in right 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 timeframe. 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.