Fred Alger Management, an investment management company, released its “Alger Spectra Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. US equities posted positive results in the third quarter with the S&P 500 Index rising 5.89%. Against this backdrop, the fund’s Class A shares underperformed the Russell 3000 Growth Index in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Alger Spectra Fund highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in its Q3 2024 investor letter. 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 7.78%, and its shares gained 26.65% of their value over the last 52 weeks. On November 20, 2024, Alphabet Inc. (NASDAQ:GOOG) stock closed at $177.33 per share with a market capitalization of $2.162 trillion.

Alger Spectra Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q3 2024 investor letter:

"Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google and a global leader in digital services and technology. Its main operating segments include Google Services (Search, YouTube, Google Play, Maps, etc.), Google Cloud Platform (GCP), and Other Bets (innovative ventures such as Waymo and Verily). Google Services generate most of Alphabet’s revenue, primarily from advertising. Their GCP provides infrastructure and tools for businesses, including AI and machine learning services. Alphabet extensively integrated AI across its products, enhancing search algorithms, personalizing content on YouTube, improving ad targeting, and driving innovations such as Waymo, their autonomous driving segment. While the company reported better-than-expected fiscal second quarter revenues and earnings, driven by strength in Search and GCP, advertising revenues from YouTube came in lower than expected. Separately, investor skepticism around the return on investment from Alphabet’s significant capital expenditures on AI infrastructure also weighed on the company’s share price. Despite reporting overall positive operating results, shares detracted from performance."

A user's hands typing a search query into a Google Search box, emphasizing the company's search capabilities.

Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 160 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter which was 165 in the previous quarter. 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.