Here's Why Sands Capital Technology Innovators Fund Sold Alphabet (GOOG)

Sands Capital, an investment management company, released its “Sands Capital Technology Innovators Fund” Q2 2025 investor letter. A copy of the letter can be downloaded here. Technology Innovators focus on pioneering businesses worldwide that serve as key drivers or beneficiaries of significant long-term changes driven by technology. The fund returned 26.0% (net) in the second quarter compared to a 21.9% return for the benchmark, MSCI ACWI Info Tech and Communication Services Index. Easing geopolitical concerns, renewed AI optimism, resilient macroeconomic data, strong corporate earnings, and technical tailwinds boosted the markets for a quick recovery in the quarter. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its second quarter 2025 investor letter, Sands Capital Technology Innovators 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 8.37%, and its shares gained 14.54% of their value over the last 52 weeks. On July 24, 2025, Alphabet Inc. (NASDAQ:GOOG) stock closed at $193.20 per share, with a market capitalization of $2.33 trillion.

Sands Capital Technology Innovators Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2025 investor letter:

"We sold Alphabet Inc. (NASDAQ:GOOG) based on concerns about the future of its internet search business amid the growing adoption of generative AI. While Alphabet has many components necessary to thrive in the world of AI, search queries have begun to decline as consumers increasingly turn to generative AI assistants. Even if the current search share loss is not having a meaningful impact on monetization, competitors are building out functionality that should shift monetization from Alphabet to the primary large language model providers. For this reason, our confidence in Alphabet’s ability to sustain above-average growth has declined and we chose to exit the position."

Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 164 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the first quarter which was 174 in the previous quarter. In the first quarter of 2025, Alphabet Inc. (NASDAQ: GOOG) achieved a revenue of $90.2 billion, representing an increase of 12% or 14% in constant currency. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Alphabet Inc. (NASDAQ:GOOG) and shared Vulcan Value Partners' views on the company. In addition, please check out our hedge fund investor letters Q2 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.