We recently published a list of 12 Best QQQ Stocks to Invest in Now. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against other best QQQ stocks to invest in now.
Lunch’ to analyze the market’s reaction to the tariff announcements. McCartney referred to the situation as tariff policy ping pong, and highlighted how it adds to the uncertainty in Washington during a time when weak data is emerging from other areas. She explained that this has created a perfect storm of challenges, which includes seasonal pressures that make this time of year difficult. Retail buyers have stepped away from the market, and there is uncertainty for individuals regarding tax policy and for corporations concerning tariffs and taxes. The withdrawal of overleveraged bids has contributed to increased market volatility, which makes it harder for major tech companies to maintain their leadership roles.
The conversation then turned to the influence of key sectors, particularly the MAG7. McCartney noted that when these sectors underperform, they can generate downside pressure on the market, which contrasts with the desire for a broader market trade. She pointed out that while these tech stocks are down year-to-date, the overall market remains materially up and is annualizing at a high single-digit rate. She expressed optimism about market breadth and suggested that this could present a buying opportunity for investors to re-enter big tech.
Tech stocks face short-term volatility due to market uncertainty, but their long-term potential remains intact.
Methodology
We sifted through the Invesco QQQ exchange-traded fund (ETF) holdings to find 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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).
Is Alphabet Inc. (GOOGL) the Best QQQ Stock to Invest in Now?
A user's hands typing a search query into a Google Search box, emphasizing the company's search capabilities.
Alphabet Inc. (NASDAQ:GOOGL) is a technology company that offers products and platforms through its Google Services, Google Cloud, and Other Bets segments. Google Services provides popular tools like Search, YouTube, and Android, while Google Cloud delivers AI infrastructure and enterprise solutions.
On March 5, BofA reiterated a Buy rating and a $225 price target on the company. This sentiment came from the company’s disclosure that it now processes over 5 trillion annual searches, up from 2 trillion in 2016. Google’s search volume has a 12% CAGR from 2016 to 2024, while the money it makes from those searches has a 19% CAGR. BofA suggests that the company’s search revenue growth comes from increased usage and monetization. This huge amount of search data will also help Google’s AI get better.
AI features like Circle to Search and AI Overviews are driving this improvement in the segment, especially among younger users. Circle to Search lets you search anything on your screen by circling, highlighting, or scribbling on it. AI overviews are the AI-generated summaries that appear at the top of Google search results, which provide quick answers to queries. Visual searches via Lens are also a major contributor, with over 20 billion monthly queries. Alphabet Inc. (NASDAQ:GOOGL) is testing Gemini 2.0 in search results and focusing on voice, camera, and visual search.
Alphabet Inc.’s (NASDAQ:GOOGL) strong Q3 earnings, particularly in its growing cloud division driven by AI demand, made it the Oakmark Equity and Income Fund’s top contributor. The fund has continued confidence in its long-term AI-driven value and stated the following in its Q4 2024 investor letter:
“Alphabet Inc. (NASDAQ:GOOGL) was the top contributor during the quarter. Despite ongoing litigation with the Department of Justice in its antitrust case, the U.S.-headquartered interactive media and services company’s stock price rose after posting solid third-quarter earnings. In the Search division, the company generated low-teens year-over-year revenue growth and management highlighted that they’re seeing strong user engagement with their new AI Overviews feature. The biggest upside surprise came from the Cloud division, where revenue growth accelerated to 35% and margins reached a record of 17%. This performance was driven by client demand for AI Infrastructure and Generative AI Solutions as well as core Google Cloud Platform (GCP) products. We continue to believe Alphabet is a collection of great businesses that can unlock further value over the long term through its world-class AI capabilities.”
Overall, GOOGL ranks 4th on our list of best QQQ stocks to invest in now. While we acknowledge the growth potential of GOOGL, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
