We recently published a list of Billionaire Seth Klarman’s 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Alphabet Inc (NASDAQ:GOOGL) stands against other billionaire Seth Klarman’s stock picks with huge upside potential.
Seth Klarman is a legendary name in the hedge fund space. He entered Wall Street straight out of college, where he worked as an analyst for Mutual Shares Corporation. Klarman then proceeded to Baupost Group, where he has been ever since. Like most hedge fund managers, Klarman has a set of principles that guide his investment decisions. Most of these principles were captured in a 1991 book titled “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor.”
Klarman has established himself as the foremost proponent of value investing. In fact, this is the central theme of the 1991 book. He advocates for removing emotions from the investing process and seeing opportunities for what they are.
He writes: “Successful investors tend to be unemotional, allowing the greed and fear of others to play into their hands.”
Also: “There is nothing esoteric about value investing. It is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value.”
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In an interview with the Harvard Business School, Klarman insisted that he is unwilling to abandon value investing for other approaches. He maintained that “value investing is intellectually elegant. You’re basically buying bargains. It also appeals because all the studies demonstrate that it works. People who chase growth, who chase highfliers, inevitably lose because they paid a premium price. They lose to the people who have more patience and more discipline.”
No wonder Baupost is one of the best-performing hedge funds in the world. The fund might have lagged behind giants like Third Point and Elliot in the 2015-2024 period but the ability to stay true to a decades-old strategy and still turn up gains is impressive. Last year, the fund culled approximately 20% of its investing team to try and steer the ship towards larger gains. To this, Klarman commented that “with a somewhat smaller investment team, we have increased the level of energy, focus, accountability, and collaboration.”
And these efforts are already bearing fruit. By December last year, the fund had gained 10%, the first double-digit return since 2021, according to Bloomberg. In other words, after 42 years in the game, Klarman is still able to turn his investment fortunes around. That is why it is prudent to see what stocks are in his portfolio, especially those with a huge upside potential.
Our Methodology
For this list, we combed through Baupost Group’s Q4 2024 SEC 13F filings. We focused only on shares in companies and excluded interests in ETFs and options. From the result, we ranked the stocks in ascending order based on analyst price targets and selected the top 10 companies with the highest upside potential (as of April 29).
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Seth Klarman of Baupost Group
Alphabet Inc (NASDAQ:GOOGL)
Upside Potential as of April 29: 25.12%
Baupost Group’s Stake Value: $271,565,000
Alphabet Inc (NASDAQ:GOOG) is the parent company of Google, the world’s dominant internet search engine, as well as YouTube, Google Cloud, and other technology ventures. The company offers a search engine (Google), video platform (YouTube), email (Gmail), cloud computing (Google Cloud), and hardware like Pixel phones and Nest smart home devices.
In Q1 2025, Alphabet Inc (NASDAQ:GOOG) reported net income of $34.54 billion, the highest quarterly net income in the company’s history. Consolidated revenue increased by 12% year-over-year to $90.2 billion. The most outstanding highlight is an $8 billion unrealized gain from the company’s investment in SpaceX, which boosted its overall profitability for the quarter.
Alphabet Inc’s (NASDAQ:GOOG) AI initiatives continue to drive user engagement and revenue growth. AI Overviews in Search now reaches over 1.5 billion users per month. On the other hand, Gemini 2.5, the company’s most advanced AI model, is achieving performance breakthroughs. CEO Sundar Pichai highlighted that all 15 of Alphabet’s products, with over half a billion users, now incorporate Gemini models, demonstrating the company’s commitment to AI integration across its ecosystem. On April 25, 2025, Citi maintained a positive outlook on Alphabet (NASDAQ:GOOG). The analysts raised the company’s price target from $195 to $200 and maintained a Buy rating.
Overall, GOOGL ranks 9th on our list of billionaire Seth Klarman’s stock picks with huge upside potential. While we acknowledge the potential of GOOGL 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 time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.