Alphabet Inc. (GOOGL) has emerged as a top-rated strong buy among hedge funds, reflecting growing confidence in its AI-driven growth trajectory. Institutional positioning highlights a significant uptick in favorable sentiment across major financial firms.
- Over 70% of hedge funds rate GOOGL as a strong buy, up from 55% in the prior quarter
- Q4 2025 revenue growth: 16% YoY, driven by 12% ad and 28% cloud growth
- Operating income increased 21% on improved margins from AI ad targeting
- Hedge funds added 14 million shares since October 2025, increasing net long exposure to 6.8%
- GOOGL’s share price rose 12% over three months, outperforming the tech sector
- Projected 2026 revenue growth: 14% to 17%, supported by cloud and AI monetization
Alphabet Inc. (GOOGL) has gained favor among hedge funds, with recent data indicating that over 70% of surveyed funds maintain a strong buy rating on the stock. This marks a notable increase from the previous quarter, when only 55% held the same view, signaling a shift in institutional sentiment. The move coincides with Alphabet’s expanding investments in generative AI, particularly through Google Cloud and Gemini, which are driving revenue expansion in enterprise and advertising segments. Key metrics underscore the momentum: GOOGL’s revenue grew 16% year-over-year in Q4 2025, with advertising and cloud segments contributing 12% and 28% growth respectively. The company reported a 21% increase in operating income, fueled by higher margins in its AI-powered ad targeting systems. These figures have prompted hedge funds to reevaluate the stock’s valuation, with many citing a forward P/E of 28 as still attractive given its growth profile and market leadership in AI infrastructure. The institutional shift is reflected in ownership changes. Large hedge fund managers have added 14 million shares to their portfolios since October 2025, boosting average net long exposure to 6.8%—the highest level since early 2023. This buying pressure has contributed to a 12% rally in GOOGL’s share price over the past three months, outpacing the broader technology sector. Investors across retail and institutional channels are now viewing GOOGL not just as a digital advertising leader but as a foundational player in the AI ecosystem. The stock’s performance is closely watched by growth investors, with analysts projecting revenue growth of 14% to 17% in 2026, supported by continued cloud expansion and AI monetization.