We recently published a list of 11 Best Safe Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against other best safe stocks to buy according to hedge funds.
In times when you never know what you’ll wake up to the next morning, playing safe seems to be the wisest choice. Amid consistent market shifts and global uncertainties, it’s difficult not to lean towards reliability. With rising global recession risks and political uncertainties, protecting the capital has become a priority for many. As Charlie Munger, Vice Chairman of Berkshire Hathaway, once said,
“The idea of investing in a company just because it’s safe is not necessarily a good idea. But it’s a much better idea than investing in something that is clearly risky.”
If we think about a “safe” stock, a low-risk stock usually comes to our mind. While it’s true, there is even more to it. A safe stock generally stems from a well-established company possessing a strong balance sheet, a track record of decent performance, solid market positioning, and a dividend history. So, when looking for a safe stock, it’s important to look for not one, not two, but all of these metrics. In its entirety, these are usually “blue chip stocks” that are market leaders in the industries they operate.
Hedge funds, recognized for their strategies and in-depth market understanding, have long advocated for such stocks for their reliability and resilience. These managers carefully study the market trends and then weigh in on businesses that are deemed to deliver both value and predictability.
As reported by Reuters, hedge funds are fleeing the stocks of companies that are providing what customers want, and what they don’t need. As the signs of a global recession are becoming more and more evident, hedge funds are dumping their positions in consumer discretionary. “Hedge funds dumping consumer discretionary stocks strongly suggests they’re bracing for economic trouble, likely a recession,” mentioned Bruno Schneller, the Managing Director at Erlen Capital Management.
Similarly, a Goldman Sachs report, comparing the gains by Hedge Fund VIP basket and the broader market, indicates that the top 50 stocks preferred by hedge funds have collectively returned 10% in 2025 relative to the market’s 3% gain.
In a “Low-Risk Stocks Outperform within All Observable Markets of the World” paper by Nardin Baker and Robert Haugen, the differences in performance by low-volatility stocks and high-volatility stocks in developed and emerging equity markets worldwide were compared. The results revealed that stocks with low realized volatility exhibit higher future returns at lower risk than stocks with relatively higher realized volatility, thus contradicting the traditional inference that attributes higher returns to higher risks. Given this, we will take a look at some of the best safe stocks to consider.
Our Methodology
In compiling a list of the 11 best safe stocks to buy according to hedge funds, we used Insider Monkey’s database of over 1,000 hedge funds, as of Q4 2024, and picked mega-cap stocks with positive five-year returns and next-year revenue growth. All of these factors are considered to ensure that the stocks selected yield low volatility and high safety. In addition, we also considered stocks that pay dividends to shareholders to ensure safety and reliability. The stocks are ranked in ascending order of the hedge funds having stakes in them.
At Insider Monkey, we are obsessed with hedge funds. 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 Safe Stock to Buy According to Hedge Funds?
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 global technology company that provides web-based search, consumer content, enterprise solutions, software engines, and advertisements through its subsidiaries. Incorporated in 1998, the segments of the company include Google Services, Google Cloud, and Other Bets. The powerhouse is dedicated to making the world’s information universally accessible and useful.
You might not think about it, but your everyday habit of turning to Alphabet Inc. (NASDAQ:GOOGL) search engine, Google, speaks volumes about its long-term growth and potential. Coupled with the AI efforts by the company, there is no questioning its position as the world’s largest digital advertiser. This is a bullish factor in itself, considering that the market is anticipated to project a 15.4% CAGR by 2030. Similarly, amid a continuously growing video streaming market, the company’s YouTube segment is also bound to expand.
In addition to these, a secular cloud and AI transition further strengthen the bullish case. Among the “Big Three” global cloud infrastructure providers is Google Cloud, a testament to the company’s AI game. Just recently, Alphabet Inc. (NASDAQ:GOOGL) reaffirmed its plan to invest an outstanding $75 billion in capex.
The company’s direction with the recent partnerships confirms that it is heading north. Whether we talk about the famous Reddit platform that embeds Google’s Gemini AI to power its conversational interface, or Samsung Electronics that leverages Google Gemini to power its home robot companion, Alphabet Inc. (NASDAQ:GOOGL) AI is everywhere.
The company’s return on capital (ROE), standing at 32%, is traditionally quite strong. The operating margins, too, are scaling over the past quarters. It wasn’t luck that expanded these margins, but the giant’s rigorous efforts to drive efficiency. With that being said, the company’s Waymo initiative is the seal of the positive outlook as the robotaxi market is likely to be the fastest-growing segment with an expected 60% CAGR for the next decade. Thus, these initiatives make Alphabet Inc. (NASDAQ:GOOGL) one of the best safe stocks according to hedge funds.
Overall, GOOGL ranks 4th on our list of best safe stocks to buy according to hedge funds. While we acknowledge the potential of safe stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
