TCW funds, an investment management company, released its “TCW Relative Value Large Cap Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities ended the year on a positive note, with the S&P 500 Total Return (USD) increasing by 2.65% and achieving a remarkable 17.9% in 2025. The AI sector continued to thrive following Trump’s tariff announcements. While there are concerning indicators similar to the Dot-Com bubble, the underlying companies appear to be defying odds with technological advancements, strong financials, and reasonable valuations. The Fund (I share) returned 4.29% in the quarter compared to 3.81% for the Russell 1000 Value Index. YTD, the Fund delivered a return of 19.32% compared to 15.91% for the Index. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, TCW Relative Value Large Cap Fund highlighted stocks like Alphabet Inc. (NASDAQ:GOOG). Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services, including online search and advertising, cloud solutions, and artificial intelligence, and is a significant contributor to the fund’s performance during the quarter. On April 6, 2026, Alphabet Inc. (NASDAQ:GOOG) stock closed at $297.66 per share. One-month return of Alphabet Inc. (NASDAQ:GOOG) was -3.02%, and its shares gained 103.07% over the past 52 weeks. Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $3.6 trillion.
TCW Relative Value Large Cap Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its fourth quarter 2025 investor letter:
“The best performing stocks in the quarter were Alphabet Inc. (NASDAQ:GOOG), Intel (INTC; 2.69%**), and Merck & Co (MRK; 2.70%**). Alphabet shares surged through October and November. Late in October, the company reported strong third quarter earnings with beats across Search, YouTube, and Cloud. Notably, Cloud’s backlog being the biggest highlight – now at $155 billion, up 46% sequentially. The shares jumped again November after the company unveiled semiconductors that some analysts think could rival NVIDIA’s†, as evidenced by news breaking that Meta Platforms (META; 2.83%**) was in talks to use them. At the same time, Google released Gemini 3, which received immediate praise from analysts for its reasoning and coding capabilities.
The investment in Alphabet was eliminated in the fourth quarter in an orderly fashion after having appreciated to the point where the shares met none of the five valuation characteristics. GOOG entered 2025 as a perceived AI loser, with investors fearing that its search business was at risk of disruption from generative AI queries, where upstart OpenAI held a seemingly large lead. This perception changed throughout the year because of a few key catalysts. On its new products/markets catalyst, Google had two lauded releases with its Nano Banana image generation model and Gemini 3 general purpose LLM, both of which garnered millions of users and helped close the gap with OpenAI. Financially, search revenue growth remained steady, and its Cloud business accelerated, driven by TPUs, Alphabet’s unique AI chips that lower model training and inference costs. Finally, on the regulatory side, the trial for GOOG’s search antitrust case resolved without any worst-case structural remedies, clearing an overhang for the stock. The stock outperformed and re rated higher as a result and is now garnering an above-market “AI winner” multiple.”
Alphabet Inc. (NASDAQ:GOOG) ranks 7th on our list of 40 Most Popular Stocks Among Hedge Funds. As per our database, 203 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the fourth quarter which was 186 in the previous quarter. In 2025, Alphabet Inc. (NASDAQ: GOOG) achieved its first-ever $400 billion annual 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 best stocks to buy according to billionaire Ken Griffin. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
