We recently compiled a list of the 10 Best Tech Stocks For Long Term Investment. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against the other tech stocks.
In a recent conversation on December 3, Clare Pleydell-Bouverie from Liontrust Asset Management appeared on CNBC and shared insights on the current state of innovation, particularly in Silicon Valley. She emphasized that the pace of innovation is not only continuing but is accelerating. This rapid evolution necessitates frequent visits to the region to discern which companies are successfully navigating this transition and which are not. Pleydell-Bouverie noted that the clarity regarding these companies is improving quarter by quarter. She expressed a firm belief that the beneficiaries of the new technology cycle, which began about 18 months to 2 years ago with the advent of ChatGPT and the AI Revolution, will differ significantly from those in the previous technology cycle. While established names remain relevant, her focus is increasingly on opportunities beyond the MAG7.
The discussion also touched on market trends for 2025, highlighting a significant focus on AI infrastructure. Pleydell-Bouverie indicated that this year has seen a concentrated effort on building out the necessary compute infrastructure before monetization can occur. This infrastructure encompasses not only silicon but also semiconductor equipment and networking components, which are essential for scaling AI capabilities. She pointed out that while model providers are often viewed as commoditized, there is an ongoing arms race to develop large foundation models. Engineering tools that facilitate the integration of AI into businesses and various applications are also critical, although currently, most value resides within the AI infrastructure layer.
Looking ahead, Pleydell-Bouverie anticipates a shift in focus toward application layers where substantial disruption is expected. Numerous AI startups are targeting established players like Salesforce, indicating a competitive landscape. Despite this shift, she believes that the importance of NVIDIA in AI infrastructure remains strong. She described its role as pivotal, suggesting that it is positioning itself to become the operating system for an emerging landscape of AI-infused software set to launch in the coming year. Pleydell-Bouverie cautioned against viewing the company merely as a chip provider; instead, she argued that understanding its strategic positioning within this technological paradigm shift is crucial for investors.
Her insights reflect a broader narrative about Silicon Valley’s ongoing transformation and its implications for investors looking to navigate this rapidly evolving technological landscape effectively. As tech stocks become increasingly popular, we’re here with a list of the 10 best tech stocks for long-term investment.
Methodology
We first sifted through the stock screeners and internet lists to compile a list of the top mega-cap tech stocks. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A user’s hands typing a search query into a Google Search box, emphasizing the company’s search capabilities.
Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Alphabet Inc. (NASDAQ:GOOGL) is a leading technology company, encompassing a diverse portfolio of products, including Google Search, Google Maps, YouTube, Google Cloud, and Waymo. In the third quarter of 2024, its performance was driven by the increasing demand for its search and cloud services, driven by advancements in AI.
Recently, it has made notable improvements in its AI capabilities, particularly in enhancing search functionality by expanding the range of questions users can pose. Additionally, the company announced that new Chromebooks would feature built-in AI functionalities, further integrating advanced technology into everyday consumer products. On the shopping front, Alphabet Inc. (NASDAQ:GOOGL) launched a new AI tool designed to assist consumers in selecting products by providing detailed information and recommendations.
The company’s CEO has highlighted that AI solutions are driving deeper product adoption among existing customers while attracting new clients and securing larger contracts. This momentum is indicative of Alphabet Inc.’s (NASDAQ:GOOGL) strategic investments in AI infrastructure and its commitment to leveraging technology to gain a competitive advantage.
GreensKeeper Asset Management stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q3 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was our largest detractor this quarter, declining by -8.8%. Global antitrust pressures have intensified, with the U.S. Department of Justice and the European Commission targeting several dominant technology companies, including Alphabet. Historically, Alphabet has signed agreements with Apple to serve as the exclusive default search engine for the Safari browser—a practice that a US court recently ruled violated antitrust law. Despite the growing possibility that Alphabet will be required to end its exclusive distribution agreements with Apple, we believe that when faced with a choice screen, the vast majority of users will continue to select Google as their preferred search engine due to its quality advantage over competitors. In EU countries where Google was previously compelled to terminate similar agreements, 97% of users opted to retain Google as their default search engine when given a choice. A similar outcome in the United States would likely have an immaterial impact on GOOGL’s earnings power. Alphabet is also facing other regulatory cases, which we monitor closely.”
Overall GOOGL ranks 4th on our list of the best tech stocks for long term investment. As we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
