What Makes Alphabet (GOOG) a Better Stock Compared to its Peers?

Middle Coast Investing, an investment advisor firm, released its first-quarter investor letter. A copy of the letter can be downloaded here. Middle Coast Investing had a difficult but manageable first quarter, but everyone has suffered since the Liberation Day crash at the beginning of the second quarter. To manage the volatility, the firm decided to increase cash goal levels by roughly 5% for each portfolio. In the quarter, the firm sold 3% more than it bought. In Q1 2025, the US Portfolios returned -3.7% compared to -4.6% for the S&P 500. It’s Core U.S. portfolios returned -0.7% while Russell 2000 returned -9.8%, S&P 600 returned -9.3% and Nasdaq generated -10.4% for the same period. However, its European Portfolios appreciated by 9.2%. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first quarter 2025 investor letter, Middle Coast Investing emphasized 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 -4.57%, and its shares gained 1.15% of their value over the last 52 weeks. On April 15, 2025, Alphabet Inc. (NASDAQ:GOOG) stock closed at $158.68 per share with a market capitalization of $1.918 trillion.

Middle Coast Investing stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q1 2025 investor letter:

"Alphabet Inc. (NASDAQ:GOOG) – We bought Alphabet (i.e. Google) in a few accounts. I’ve owned it before, but not for very long. I usually don’t focus on buying the biggest tech companies, even as we have the one portfolio with the large AMZN / AAPL positions.

One reason to do this is to give the portfolios with Alphabet exposure to large cap technology, a huge part of the market. But also, of the so-called Magnificent Seven or any other trend of huge tech stocks you want to name, Alphabet is the most attractive. At $170/share, where we bought it, it traded at 19x 2025 earnings estimates and 21x 2024 earnings results before crediting its balance sheet for its huge cash position. That is less than the S&P 500.

Alphabet is supposedly threatened by the advent of ChatGPT and generational AI. It seems as likely to me that Alphabet wins or at least ties Microsoft and OpenAI in these battles as anything else. It also seems as likely to me that the generative AI trend slows down, and the incumbent, Google search, becomes the business winner…” (Click here to read the full text)

Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 174 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the fourth quarter which was 160 in the previous quarter. In 2024, Alphabet Inc. (NASDAQ: GOOG) achieved a revenue growth of 14% compared to 2023, reaching $350 billion. For the fourth quarter, the revenue was $96.5 billion, reflecting a 12% increase in both reported and constant currency. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We covered Alphabet Inc. (NASDAQ:GOOG) in another article, where we shared Vulcan Value Partners' views on the company. In addition, please check out our hedge fund investor letters Q1 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.