Tsai Capital, an investment management company, released its fourth quarter investor letter. A copy of the letter can be downloaded here. Tsai Capital celebrated 25 years track record in 2024. Tsai Capital Growth Equity Strategy gained 23.0% after fees, and 24.5% before fees in 2024 compared with a total return of 25.0% for the S&P 500 Index. The strategy gained 604.5% cumulatively after fees, and 886.4% before fees since its inception 25 years ago compared to 526.7% total return for the S&P 500 Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Tsai Capital highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter. Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services operating through Google Services, Google Cloud, and Other Bets segments. The one-month return of Alphabet Inc. (NASDAQ:GOOG) was 3.44%, and its shares gained 38.17% of their value over the last 52 weeks. On January 29, 2024, Alphabet Inc. (NASDAQ:GOOG) stock closed at $197.18 per share with a market capitalization of $2.402 trillion.
Tsai Capital stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) (GOOG—Year of First Purchase: 2017) Sundar Pichai, who became CEO of Alphabet in 2019, is currently leading the company through multiple antitrust cases, one of which involves Google Search. Despite these regulatory challenges and growing competition from large language models like ChatGPT, DeepSeek, Microsoft Copilot, and Perplexity AI, we believe Google is at the forefront of the AI race and is well-positioned to navigate a fast-changing environment.
The company also owns YouTube, which has over two billion monthly users and a rapidly-expanding subscription business. While we have concerns about competition from AI chatbots, we believe Google Search has a strong economic moat that is underpinned by data and insights that the chatbots lack—at least, for now.
Alphabet also owns one of the three major cloud companies (Google Cloud Platform), not to mention a number of private businesses with the potential to reward shareholders richly over time. Putting it all together, we believe the Google ecosystem—supported by intangible assets, network effects, cost advantages, and customer switching costs—can propel Alphabet’s overall revenue growth at a compound annual rate of about 10% over the next five years.
With approximately $105 billion ($8.61 per share) in cash and securities, net of debt and operating leases, the company has a robust balance sheet. Its free cash flow conversion remains excellent.”
A user’s hands typing a search query into a Google Search box, emphasizing the company’s search capabilities.
Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 160 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter which was 165 in the previous quarter. While we acknowledge the potential of Alphabet Inc. (NASDAQ: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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Alphabet Inc. (NASDAQ:GOOG) and shared the list of AI superstar stocks according to Goldman Sachs. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.