5 Stocks That Will Always Grow

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 204

Alphabet Inc. (NASDAQ:GOOG) shares will always grow because the company has a diverse business model, spanning advertising, Cloud, AI, and other innovative technologies like self-driving cars. Currently, Alphabet Inc. (NASDAQ:GOOG) dominates the search engine market, with a 93% market share. Its closest competitor (Bing) has just 3% market share. It’ll take years if not decades for other companies to catch-up. Alphabet Inc. (NASDAQ:GOOG) also owns YouTube, which is the go-to video platform for billions of people. Alphabet Inc. (NASDAQ:GOOG)’s Cloud and AI businesses will offset the threats the company faces from competitors in the search business.

As of the end of the second quarter of 2023, 204 hedge funds out of the 910 funds in Insider Monkey’s database were long Alphabet Inc. (NASDAQ:GOOG). The biggest stakeholder of Alphabet Inc. (NASDAQ:GOOG) was Natixis Global Asset Management’s Harris Associates which owns a $3.2 billion stake in the company.

Giverny Capital Asset Management made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2023 investor letter:

“I have believed for a while that we’re better served with a lower weight to the tech giants – we own Alphabet Inc. (NASDAQ:GOOG) (8.1% of our model portfolio at the end of June) and Meta (5.2%) for a 13.3% exposure, or about half the Index’s weight in the giants. And while Alphabet’s 36% return for the first half and Meta’s 138% return were gratefully received, I’m pleased to report that if we strip out that contribution to our overall return, the other 23 stocks we own, constituting 85% of our portfolio (with cash making up the balance), were up 10.2% on a weighted basis.

GCAM owns two of the seven tech mega caps in Alphabet and Meta, and they enjoyed similar rises. As mentioned, Alphabet A&C shares rose 36% while Meta rose 138%. Together, they added 2.38 percentage points to the overall Index return, meaning these seven tech giants cumulatively generated 12.4 percentage points of return, or roughly three-quarters of the Index’s return.

Alphabet and Meta combined sport a $2.25 trillion market cap and between them should generate roughly $120 billion of pretax profit this year. That’s a multiple of 19 times pretax profit, a substantial discount to Microsoft and Apple, and an even larger discount to Amazon, Nvidia and Tesla.”