Jim Cramer on the Magnificent Seven Stocks Plus Netflix

4. Alphabet Inc. (NASDAQ:GOOGL)

Number of Hedge Fund Holders: 216

Talking about Alphabet Inc. (NASDAQ:GOOGL) in light of his “own it, not trade it” philosophy, Cramer said:

“Now I don’t feel the same way, candidly, about Alphabet and in part, that’s because the government has made it much harder to own it, with this antitrust lawsuit that’s aimed for a breakup, something I’m very much opposed to. I’m also concerned about Alphabet’s ability to keep putting up strong earnings. Company now has a less defensible position because it’s become more of a media business and that’s a very competitive space… So, the stock’s a comeback kid and I am so glad we own some for the Charitable Trust.”

Alphabet Inc. (NASDAQ:GOOGL) serves as the holding company formed from Google’s restructuring in 2015, with Google itself primarily recognized as a leading search engine. As a dominant player in the digital advertising sector, the company benefits significantly from its successful Google Search platform, which contributed over half of the company’s $84.7 billion in revenue during the second quarter. Google Cloud also reported great performance, achieving a 29% increase in year-over-year revenue growth in the same quarter.

However, Alphabet Inc. (NASDAQ:GOOGL) is facing significant legal challenges. The U.S. Department of Justice filed an antitrust lawsuit against the company in 2020, accusing it of engaging in monopolistic practices, including paying $26.3 billion in 2021 to companies to secure Google as the default search engine. Recently, there have been indications from the Justice Department suggesting a breakup of Google to address its perceived monopoly in search.

The Justice Department’s proposed remedies could drastically alter how users will access information online, potentially reducing Google’s revenues and allowing competitors to gain a foothold in the market. Additionally, these measures aim to prevent Google from extending its dominance into the growing field of artificial intelligence. There is also speculation that the Justice Department might seek to terminate Google’s payments that facilitate its default status on new devices.