Here are the Reasons to Establish a Position in Alphabet (GOOGL)

Qualivian Investment Partners, an investment partnership focused on long-only public equities, released its Q1 2025 investor letter. A copy of the letter can be downloaded here. The fund outperformed the iShares MSCI USA Quality Factor ETF (QUAL) by 66.0% and 59.4% on a gross and net basis, since inception through March 31, 2025. It also exceeded the S&P 500 by 32.7% and 26.1% respectively, on a gross and net basis. In Q1 2025, the fund outperformed QUAL by 5.3% and 5.2% on a gross and net basis, and we outperformed the S&P 500 by 5.2% and 5.1% on a gross and net basis. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Qualivian Investment Partners highlighted stocks such as Alphabet Inc. (NASDAQ:GOOGL). Alphabet Inc. (NASDAQ:GOOGL), 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:GOOGL) was 5.81%, and its shares lost 5.07% of their value over the last 52 weeks.  On July 1, 2025, Alphabet Inc. (NASDAQ:GOOGL) stock closed at $175.84 per share, with a market capitalization of $2.14 trillion.

Qualivian Investment Partners stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its Q1 2025 investor letter:

"Alphabet Inc. (NASDAQ:GOOGL) declined in the quarter due to (1) uncertainty regarding the returns on the large amount of capital expenditure being spent on generative AI investments and whether they will yield proper returns and (2) whether competing generative AI chatbots (Chat GPT, Perplexity, others) will take share away from GOOGL’s core search business.

GOOGL has been under a lot of pressure in recent months to prove it can be a winner in the AI search race. The company responded by introducing AI Overviews (AI-generated answers to search queries that appear at the top of the page). Reception to the AI Overviews has been encouraging, with consumers searching more frequently and clicking through at higher rates. GOOGL has also introduced ads on AI Overviews which are monetizing at similar rates as regular search ads.

In May , the company announced that it is integrating AI into its search engine through AI Mode. Users can make more complicated requests in a conversational chatbot interface, performing multi-step tasks like finding tickets or making reservations..." (Click here to read the full text)

Alphabet Inc. (NASDAQ:GOOGL) is in 4th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 227 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOGL) at the end of the first quarter, which was 234 in the previous quarter. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOGL) 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 undervalued AI stock set for massive gains.

In another article, we covered Alphabet Inc. (NASDAQ:GOOGL) and shared the list of stocks Jim Cramer recently commented on. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of GOOGL 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.

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