Is Alphabet Inc. (GOOG) the Best Fundamental Stock to Buy According to Billionaires?

We recently published a list of 10 Best Fundamental Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOG) stands against other best fundamental stocks to buy according to billionaires.

As per Fitch Ratings, the US tariffs are now at levels that continue to transform the global economic outlook, meaningfully increasing the US recession risks as well as constraining the US Fed’s ability to reduce the interest rates further. The ratings agency believes that tariff hikes are expected to result in increased consumer prices and reduced corporate profits in the US. The increased prices can squeeze real wages, impacting consumer spending, with reduced profits and policy uncertainty weighing over business investments. Notably, upward pressure on goods prices due to tariffs would mean that the US Fed is likely to become more cautious when it comes to further rate cuts.

Tariffs Can Be Reduced, Says UBS

In the base case (to which UBS assigns a 50% probability), the firm anticipates tariffs to be reduced from the levels that have been announced. That being said, the process is expected to take some time. UBS anticipates that there can be a tariff-related slowdown in growth in Q2 and Q3. Even if tariffs get reduced by the end of the year, the shock and related uncertainty can result in a near-term slowdown in the broader US economy, impacting FY 2025 growth.

UBS believes that market uncertainty is expected to remain elevated, with investors focusing on potential downgrades to consensus US economic and earnings growth projections, the risk related to the tit-for-tat escalation, among others. Therefore, there can be an extended period of volatility for the broader US equities.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

What Should Investors Do?

Despite the uncertainties, UBS expects that the market will end the year higher. Apart from themes of AI and Power and resources, the firm has identified longevity and companies benefiting from the megatrend as the third Transformational Innovation Opportunity. The investors can also consider using yield-generating strategies so that they can benefit from current increased levels of volatility. UBS says that since the tariffs have been announced, negotiations to soften can now start.

Furthermore, the tariff revenue can be utilised to offset the cost of extending tax cuts. Additionally, the Fed may respond to weakening growth by cutting interest rates. Morningstar believes that some of the leading mega-cap stocks rated as “wide moat” have experienced a decline this year.  The firm believes that wide-moat stocks are the most attractively valued, and it sees value throughout the entire range of such stocks.

Our Methodology

To list the 10 Best Fundamental Stocks to Buy According to Billionaires, we sifted through Vanguard S&P 500 ETF and Insider Monkey’s exclusive database of billionaire stock holdings to shortlist the companies that have at least ~8% revenue and net income growth over the past 5 years. For the stocks with the same number of billionaire holdings, we have used the number of hedge fund investors as a secondary metric to rank the stocks, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Alphabet Inc. (NASDAQ:GOOG)

5-year Revenue Growth: 16.6%

5-year Net Income Growth: 23.8%

Number of Billionaire Investors: 24

Number of Hedge Fund Holders: 174

A reputed investor, with the pseudonym Juxtaposed Ideas, opines that the dip in Alphabet Inc. (NASDAQ:GOOG)’s stock offers a limited window to buy in. The investor expressed optimism regarding the Google Services business, with the company being able to monetize the existing offerings. Furthermore, the investor opines that Alphabet Inc. (NASDAQ:GOOG)’s autonomous segment is expected to act as a long-term growth driver. The company’s ongoing investments in AI technology can create significant value throughout the diverse portfolio of products and services.

In search, the integration of more advanced AI models can help in improving query understanding as well as result relevance, enhancing user engagement and ad effectiveness. This could help Alphabet Inc. (NASDAQ:GOOG) maintain its search market dominance as well as fuel continued growth in advertising revenues.  The company’s AI advancements can result in breakthrough products in emerging fields, including autonomous vehicles (through Waymo) and quantum computing. In cloud computing, Alphabet Inc. (NASDAQ:GOOG)’s AI capabilities can help it stand apart from competitors, resulting in more enterprise customers and fueling higher-margin service adoption.

Columbia Threadneedle Investments, an investment management company, released Q4 2024 investor letter. Here is what the fund said:

“Alphabet Inc. (NASDAQ:GOOG) (parent company Alphabet) generated strong double-digit returns during the quarter, as the company’s tremendous innovation in AI, along with strength in its core business of search and advertising and a healthy focus on profit growth and shareholder friendly capital allocation, shifted investor focus away from ongoing litigation with the Department of Justice related to market dominance. In the month of December alone, Google released to the public Gemini 2.0, its most capable AI model yet, as well as new generative image and vision models. And if that was not enough, Google also announced progress in quantum computing. Once considered an AI laggard, the flurry of product announcements and AI development did not go unnoticed by the market and the stock reacted accordingly.”

Overall, GOOG ranks 7th on our list of best fundamental stocks to buy according to billionaires. While we acknowledge the potential of GOOG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. This article is originally published at Insider Monkey.