Alphabet Inc. (NASDAQ:GOOGL) continues to be one of Jim Cramer’s favorite stocks. A part of his Charitable Trust portfolio, the CNBC Tv host has praised the firm regularly for its diversified business model that stretches from search engines to AI, cloud computing and video streaming. Alphabet Inc. (NASDAQ:GOOGL)’s shares are up by 70% over the past year and by 9% year-to-date. Earlier this month, on the 5th, the firm’s multi-decade AI veteran Jeff Dean announced that he was leaving the firm. Alphabet Inc. (NASDAQ:GOOGL)’s shares closed 4% lower on that day, and on the 6th, Cramer asserted that the robust business model was still intact:
“See the Google, okay so I hear that the Google guy leaves. Okay, and I actually know his name. . .this guy leaves, and I say to myself, okay, that is, I wish that I. . .and everyone knows he’s great, okay, so, I say to myself, do I have to sell it? I own it for my Charitable Trust? Then I say, no, cause they got through this. They have YouTube, and they do have Waymo, they have a lot of good things going. And then people tell me, Jim, you have to start questioning, actual Google, the Search. And I just find, I question, I still can’t find what’s wrong with it. Smarter people may know. . .”
Cramer’s thoughts about Alphabet Inc. (NASDAQ:GOOGL) tie into the broader debate about the firm. As is the case with all big tech firms, the bulls and the bears are divided about the necessity of the multi-billion-dollar capital expenditures for the artificial intelligence buildout. The bulls point towards Alphabet Inc. (NASDAQ:GOOGL)’s cloud business, which grew revenue by a whopping 92% in the second quarter and its $514 billion cloud services backlog as evidence of the returns from the spending. Additionally, they also point towards a 90% market share to outline that the firm has managed to hold ground in its key market despite the challenges posed by AI.
However, the impact of the capital expenditure on the free cash flow, which has also forced Alphabet Inc. (NASDAQ:GOOGL) to raise debt, are some factors that leave the bears anxious. Cramer’s remarks suggest that he is in the bullish camp, which is unsurprising. However, the CNBC host’s comments after Alphabet Inc. (NASDAQ:GOOGL)’s second quarter earnings were more cautious. Pointing towards the returns from the firm’s custom AI chips, Cramer commented:
“Google Cloud is doing great. Just great. So you have to say, well that works. But the other side, the actual compute, that you’re selling say to others, or that you’re using, we haven’t figured out the return on that yet, David. Or whether there will be a return. Which is if there’s not a return, I’m sorry, I’m not going to buy this stock. I’m going to find something else that works in tech.”
As for the hedge funds, 288 out of the 1,041 hedge funds part of Insider Monkey’s Q4 2025 database had owned a stake in the firm. In Q1, the figure dropped to 265. 1.2% of the float was short as of July end, for a slight dip over the 1.34% in mid-July. Alphabet Inc. (NASDAQ:GOOGL) is also part of our list of 10 Blue Chip Stocks Jim Cramer is Crazy About.
While Insider Monkey acknowledges the risk and potential of GOOGL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GOOGL that has 100x upside potential, check out our report about the cheapest AI stock.
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Disclosure: None.
