Baron Funds released its “Baron Durable Advantage Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund appreciated 5.6% (Institutional Shares) in the quarter compared to an 8.1% increase for the S&P 500 Index (the Index). YTD, the fund is up 13.6% compared to a 14.8% gain for the index. Three-quarters into 2025, U.S. large-cap equity investors are enjoying gains. The rally from the start of 2023 still looks strong in this quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its third-quarter 2025 investor letter, Baron Durable Advantage Fund highlighted stocks such as Alphabet Inc. (NASDAQ:GOOG). Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services operating through Google Services, Google Cloud, and Other Bets segments. The one-month return of Alphabet Inc. (NASDAQ:GOOG) was 13.63%, and its shares gained 59.04% of their value over the last 52 weeks. On November 17, 2025, Alphabet Inc. (NASDAQ:GOOG) stock closed at $285.60 per share, with a market capitalization of $3.448 trillion.
Baron Durable Advantage Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its third quarter 2025 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, the world’s largest search and online advertising company. Shares rose 37.4% during the quarter on strength in the company’s core businesses, as well as in Google Cloud and Other Bets. Despite rising usage of AI competitors such as ChatGPT, both Google Search and YouTube delivered double-digit revenue growth year-over-year. Additionally, Google Search paid clicks increased compared to the prior year, Google’s AI assistant Gemini reached the top spot on Apple’s App Store, Gemini Pro 2.5 has topped the AI eval ranking LMArena, and new AI-powered features for Chrome were announced. Cloud revenue growth also accelerated 32% year-over-year, driven by demand for AI cloud services. Meanwhile, the resolution of the Department of Justice’s antitrust case concerning Google Search was better than feared, lifting an overhang on the stock. Long term, even though we continue to monitor the potential impact of AI chatbots on search, we believe Alphabet would emerge as an AI winner, leveraging its extensive AI talent, expertise, full stack offering (from hardware to software) and vast ecosystem. Specifically, the company’s DeepMind research and AI talent, coupled with the development of custom tensor processing units, provide a full-stack advantage for cost efficiently scaling its AI products, such as the Gemini models. This technological edge is magnified by its massive user base, often called the “billion user club” (across 9 products: Search, YouTube, Maps, Gmail, Chrome, Android, Play store, Photos, and Drive), which dramatically lowers customer acquisition costs and creates a powerful flywheel effect for attracting developers. Furthermore, Alphabet is uniquely positioned to dominate the future of AI powered commerce, where its scaled surfaces like YouTube can use real-time object recognition to make virtually any piece of content shoppable, while also making content creation easier, and ads more personalized.”
Alphabet Inc. (NASDAQ:GOOG) is in the 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 178 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the second quarter which was 164 in the previous quarter. In the third quarter of 2025, Alphabet Inc. (NASDAQ: GOOG) achieved its first-ever $100 billion in revenue. While we acknowledge the risk and potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, our conviction lies in the belief that some 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 Alphabet Inc. (NASDAQ:GOOG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Alphabet Inc. (NASDAQ:GOOG) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
