Top 10 Buzzing AI Stocks to Watch Now

4. Alphabet Inc (NASDAQ:GOOG)

Number of Hedge Fund Investors: 174

Jim Cramer in a latest program on CNBC said he’s been selling Alphabet Inc (NASDAQ:GOOG) shares at his investing club and mentioned some reasons for his bearish outlook:

“I mean, people know members of my club, they know I’ve been selling it down and selling it down and selling it down. Would it be the first one that I leave of the mag? Yeah, except for it does sell only for 20 times earnings. But I think they really got to rethink what their game plan is here because I feel like Gemini competes with Google search, and the thing is, the ads are endless, and they don’t know how to monitor YouTube.”

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.

Bretton Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:

“Alphabet Inc. (NASDAQ:GOOG) was the major contributor for the quarter, adding 1.3%. Alphabet’s stock followed up a strong 2023 with another strong year, adding 2.7% to the fund as our top contributor.

Alphabet’s revenue in 2024 was $350 billion, which was $43 billion more than the previous year. That’s the equivalent of adding the entire revenue of a company like Coca-Cola, Oracle, Starbucks, or our very own Visa in a single year. Users’ demand for more internet video and information—and the demand for advertisers to get in front of them is massive and still growing fast. YouTube is the world’s most-watched streaming video platform and accounts for 10% of Americans’ time in front of a TV, more than any traditional TV channel.

Despite growing much faster than the average company, Alphabet continues to trade at roughly the same price-to-earnings multiple as the rest of the market. Earnings per share grew 39% last year, and we expect it will grow in the mid-teens for the next few years. If it comes anywhere close to that, the shares today are a bargain…”(Click here to read the full text)