The buzz about artificial intelligence (AI) on Wall Street and Main Street continues to grow. The incredible rise of Nvidiawhose turnover has increased from $17 billion in 2021 to $96 billion in the past twelve months, has helped push the major stock indexes to record highs.
NVDA Revenue Data (TTM) according to YCharts
Meanwhile, OpenAI’s release of ChatGPT sparked a race by major tech companies to create increasingly advanced generative AI technology. According to estimates from the firm Next Move Strategy Consulting, the entire AI market could be worth more than $1.8 trillion by the end of the decade.
Statesman.
With hundreds of companies competing for shares of this market, choosing what to invest in can be a challenge. Investigating where billionaire hedge funds invest can be enlightening. Investment managers managing more than $100 million must file 13F forms with the Securities and Exchange Commission 45 days after the end of each quarter, detailing all of their stock sales and purchases made during that quarter. The last registrations were received last week. Here’s a stock that was particularly popular among highly experienced Wall Street professionals.
Alphabet’s AI future
Alphabet (GOOGL -4.75%) (GOOG -4.56%), Microsoft, MetaplatformsAnd Amazon are expected to invest a combined $189 billion in AI infrastructure by 2024. Google DeepMind is Alphabet’s team dedicated to AI research and development. Gemini – the answer to ChatGPT – is integrated into Google Search and has just been released as an iPhone app.
Alphabet is also reportedly developing a bot called Project Jarvis that will automate tasks such as research, shopping or booking travel through Google Chrome. Moreover, according to Technology magazine60% of generative AI startups use Google Cloud.
Tudor Investment, which manages more than $27 billion, increased its stake in Alphabet by 461% in the third quarter to 543,600 shares worth about $95 million. That investment is still less than 1% of the fund’s total assets, but was still a significant increase. Viking Global Investors also manages more than $27 billion and started a new position in Alphabet in the third quarter for 1.3 million shares (worth approximately $227 million).
Meanwhile, Bridgewater Associates ($17.6 billion under management) owned more than 4 million shares of Alphabet, and Tiger Global ($23.4 billion under management) owned more than 10 million shares. It is important to note that these were the stock positions they held as of September 30th. Things may have changed in the meantime.
One reason for their decision to buy Alphabet stock may be the company’s recent impressive results. Revenue grew 15% to $88 billion in the third quarter, while operating income rose 34% to $28.5 billion. Meanwhile, cash flow generated from operations was $31 billion for the quarter and $86 billion for the year to date. This gives the country the crucial capacity to continue investing in infrastructure, but also to pay dividends and buy back shares.
Alphabet shares currently trade at about 23 times earnings, which is slightly lower than the five-year average of 26 and lower than the valuations of major tech players like Microsoft and Meta.
GOOGL PE ratio data by YCharts.
The fact that numerous billionaires are taking large stakes in Alphabet adds to Alphabet’s credibility as an investment. And the company’s investments in AI, financial performance and valuation make Alphabet an attractive long-term investment opportunity.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Bradley Guichard has positions in Amazon. The Motley Fool holds positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
