We recently published a list of 10 Best American Stocks To Buy and Hold in 2025. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against other best American stocks to buy and hold in 2025.
Will the Market Continue To Be Bullish in 2025?
Wall Street’s outlook for the stock market in 2025 reflects a cautious optimism following two consecutive years of substantial gains. Analysts predict continued growth, however at a more moderate pace compared to the explosive increases of 2023 and 2024. According to a report by CNN, published on January 1, strategists anticipate a 14.8% increase in the S&P 500 for 2025, which is significant but lower than the previous years’ performances. The Index saw gains of approximately 23% in 2024 and 24% in 2023. As per the report 2025 marks a return to typical growth rates after an extraordinary period of high returns, which has not been seen since the late 1990s.
While several factors are expected to contribute to the market growth, there are potential risks that can hinder it. One of the key factors contributing to growth is the anticipated business-friendly policies under President-elect Donald Trump. Dan Ives, who is a technology senior analyst at Wedbush Securities in his December 30 note mentioned his expectations that tech stocks can rise 25% in 2025 due to less regulation under the Trump administration. The analyst has picked Technology and Artificial Intelligence (AI) stocks as his best performers for the year.
On the other hand, there are potential risks that could negatively impact the stock market. For instance, the uncertainty surrounding Trump’s policy decisions may create a volatile environment for markets. Traders are particularly wary of how proposed tariffs could affect economic stability and investor confidence. David Sekera from Morningstar emphasizes that the implementation of tariffs is a significant wildcard that could sway market performance in either direction. We recently covered the analysis of Jurrien Timmer, Director of Global Macro at Fidelity Management & Research Company in our article titled, 12 High Growth International Stocks to Invest in Now. Here’s a piece from our coverage:
“While talking about large-cap stock performance, Timmer raises the question of whether this trend of narrow leadership will persist. He suggested that trends continue to move in the same direction until a significant change occurs. Given that large-cap growth stocks have dominated for years, it is reasonable to assume that they may continue to lead. However, he also cautioned the investors that as per the concept of mean reversion, asset prices will eventually return to their historical averages and when this happens, it could lead to sharp corrections in stock prices. Timmer believes that while 2024 was a “Goldilocks year,” for earnings and valuations, this year can be a tussle between higher earnings and rising long-term interest rates, thereby resulting in a volatile market.”
Our Methodology
To get the list of the 10 best American stocks to buy and hold in 2025, we used Insider Monkey’s third-quarter hedge funds database. Using the database we ranked the top 10 American stocks in ascending order of the number of hedge funds holding stakes in them.
Why do we care about what hedge funds do? 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 an American technology company known for its search engine Google. Its search engine has become so popular that it is recognized as a verb now. However, what some investors might not know is the company’s position in the AI industry. Its language model, Gemini, is seen as one of the top options in the space. The company has also incorporated AI into Google search, which provides an overview of the search results. In addition, Gemini 2.0 has also been launched now, which allows users to run more complex tasks using AI.
Analysts appreciate its efforts in the field of AI and also its stronghold within the core business of advertising and search engines. On January 24, analysts at Scotiabank raised their price target on Alphabet Inc. (NASDAQ:GOOGL) to $240 from the previous target of $210. Analysts kept their Overweight rating on the stock, expecting continuous demand for its products and services in 2025. During the fiscal third quarter of 2024, the company grew its revenue by 15% year-over-year and delivered a net income of $26.3 billion, demonstrating a robust financial position. It is one of the best American stocks to buy and hold in 2025.
Oakmark Equity and Income Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. Despite ongoing litigation with the Department of Justice in its antitrust case, the U.S.-headquartered interactive media and services company’s stock price rose after posting solid third-quarter earnings. In the Search division, the company generated low-teens year-over-year revenue growth and management highlighted that they’re seeing strong user engagement with their new AI Overviews feature. The biggest upside surprise came from the Cloud division, where revenue growth accelerated to 35% and margins reached a record of 17%. This performance was driven by client demand for AI Infrastructure and Generative AI Solutions as well as core Google Cloud Platform (GCP) products. We continue to believe Alphabet is a collection of great businesses that can unlock further value over the long term through its world-class AI capabilities.”
Overall, GOOGL ranks 4th on our list of best American stocks to buy and hold in 2025. While we acknowledge the potential of GOOGL to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
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