10 Stocks to Watch Ahead of Q3 Earnings Season

2. Alphabet Inc (NASDAQ:GOOG)

Number of Hedge Fund Investors: 178

Saira Malik, chief investment officer at Nuveen, said in a latest program on CNBC that Alphabet Inc (NASDAQ:GOOG) continues to be a leader in the AI space. She explained why she likes the stock:

“Looking at Alphabet, people are worried about what will the impact of OpenAI be on Google’s advertising business and genesis. I think the impact is not going to be as great as people think and you have the upside from Waymo and their YouTube business.”

Lakehouse Global Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2025 investor letter:

“We’ll wrap things up with Alphabet Inc. (NASDAQ:GOOG) , which in similar fashion to Hemnet, only experienced a marginal share price decline over the year. That said, Alphabet did meaningfully underperform our average portfolio return as concerns that it’s near monopolistic position in Search (which generates the majority of their advertising revenue) could be eroded by new Artificial Intelligence (AI) alternatives like ChatGPT and Perplexity. When it comes to the potential risks AI poses to the dominance of search, our view is a balanced one. No doubt uncertainty has increased but we believe Alphabet remains well positioned through its massive user distribution (9 products with over 1 billion users each) and long-standing investments and leadership in AI (DeepMind and Google Brain).

Alphabet is innovating fast and has already successfully rolled out their own AI powered search function, AI Overviews. To date, engagement has been encouraging with consumers searching more frequently, with more detailed queries and clicking through at higher rates. Management has noted that AI Overviews are monetising at the same rate as regular Search ads and, that as of April, AI Overviews had already reached 1.5 billion monthly users. This is a much larger base than ChatGPT and highlights the inherent distribution advantage Alphabet has by being able to directly integrate AI Overviews into the widely used Google Search engine.

Looking at current fundamentals, business momentum continues to be strong with revenue growing 12% year-over-year (14% constant currency) in the most recent quarter. This was driven by double-digit growth across Search, YouTube advertising, subscription platforms, and Google Cloud. Cost discipline efforts are also improving profitability, and operating margins have expanded steadily to 32.6%, up from 25.6% two years ago. With a relatively undemanding valuation of less than 20x forward earnings, we still believe the risk/reward for Alphabet is attractive. That said, it would be remiss not to acknowledge that the future dominance of Search is less certain today than it was a few years ago as the range of potential outcomes has widened. As such, we rightsized our position on strength earlier this year.”