3. Alphabet Inc (NASDAQ:GOOG)
Number of Hedge Fund Investors: 160
Joe Tigay from Rational Equity Armor Fund said in a latest program on Schwab Network that he likes Alphabet (NASDAQ:GOOG) stock and mentioned the reasons behind his bullish thesis:
“I am very excited about Alphabet. You know, they had a slow start when we went into this AI world. They were offside, they had a false start, they had a terrible rollout of their Bard, I think it was called at the time. They’ve completely reshaped that. I love how they’re currently working with Gemini, they’ve partnered with Apple, and I think they’re fighting very hard with OpenAI to be the LLM leader. I think that’s an interesting spot in the AI world. There’s so much more in the AI world that we’re just scratching the surface of, and we saw their advancements with their quantum computing. I think that’s the type of company, that’s the type of visionaries that are at Google, just looking past this LLM, looking past the current technologies that are out there, and looking for the future. I just think that they are there, and they are so well-positioned to take advantage of all of it. They have the data, they have the video, they have everything. They’re in phones and their own phones and everything else. So yes, I love this company for the short term, I love it for the long term, and I think it’s an integral part of this technology AI breakthrough.”
Alphabet shares slipped following the company’s latest quarterly results. The market was spooked by the massive $75 billion Capex guidance for 2025. However, GOOG bulls believe these investments will pay off. The company needs to spend to maintain its dominance in search. Its Gemini model has an edge over competitors because of the huge ecosystem Alphabet already has. For the end user, it’s easier to switch from traditional search to Geminin instead of moving to a completely new app like ChatGPT or Perplexity. So far AI competition hasn’t dented the company’s search revenue.
In the fourth quarter, Alphabet’s operating margin rose 32%. YouTube ad revenue jumped 14% and Cloud revenue skyrocketed by 30.1%. Google raked in $12.8 billion in FCF, marking a roughly 215% growth compared to the same period last year, despite heavy investments in AI. The stock has a forward (2026) P/E ratio of 20.8x, which makes it about 22% cheaper than the average company in its sector.
Montaka Global Investments stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“While the bulk of Montaka’s portfolio exposures continued to remain relatively stable over the December quarter, we did undertake some modest hands-on portfolio management in the tail-end of the portfolio.
We exited three of Montaka’s smallest portfolio names. While we see long-term upside in all of these names, we see more upside elsewhere. Hence, we reallocated these proceeds to (i) scale up Montaka’s investment in Alphabet Inc. (NASDAQ:GOOG) on increased probabilities that its advantages in Google Search are strengthening (not to mention the group’s numerous growth options increasing in probability – from YouTube, to Waymo, and even quantum computing); and (ii) to establish an initial ‘outlier’ position in database software provider, MongoDB (MDB).”
