Jim Cramer’s Hottest 10 Stock Picks

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Investors:165

Jim Cramer pointed out that Alphabet Inc. (NASDAQ:GOOG) isn’t just purchasing video chips for AI out of general concern about competition. Instead, they’re particularly worried that Meta might overtake them, and Cramer believes this concern is justified.

“Google aren’t buying because they’re worried that the other guys might do something. They’re specifically worried that Meta is going to catch and pass them and they should be.”

Alphabet Inc. (NASDAQ:GOOG)’s leadership in artificial intelligence (AI), along with its seamless integration of AI into its products—ranging from search and advertising to cloud services and hardware—positions the company for sustained growth. The stability of Alphabet Inc. (NASDAQ:GOOG)’s financial health is underpinned by its search advertising, which continues to be a major revenue source.

Furthermore, Alphabet Inc. (NASDAQ:GOOG)’s extensive ecosystem, including Android, Chrome, Google Maps, and YouTube, enhances user engagement and drives revenue growth through its interconnected services. In Q2 2024, Alphabet Inc. (NASDAQ:GOOG) reported $85 billion in revenue, a 14% year-over-year increase, largely driven by a 29% rise in Google Cloud revenue to $10.35 billion.

Cooper Investors Global Equities Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q2 2024 investor letter:

“Unsurprisingly the portfolio’s best performers in the very short term reflect this pattern, having narrowed to those most obviously exposed to the AI story – TSMC and Alphabet Inc. (NASDAQ:GOOG). While the portfolio has owned semiconductor companies for years it remains diversified and is underweight the group from an active risk perspective, dragging on relative performance in the last six months. The portfolio is currently positioned to take advantage of the Value Latency we see in smaller sized companies, and the performance of the quarter has been more aligned with those factors.

While this positioning is painful in the short-term, we see considerable embedded value in our portfolio. We also see considerable risks and uncertainties existing in the AI theme that are not reflected in the Value Latency on offer in many stocks that have surged.

Returning to the AI story, today the portfolio has around 10% of capital invested across TSMC and Alphabet. Meantime, Alphabet has multiple value levers to  pull across AI-augmented search, YouTube (now the ‘must-have’ streaming platform for young people) and Google Cloud.”