The excitement surrounding artificial intelligence (AI) continues to surge both on Wall Street and Main Street, reflecting its growing impact on the economy. The astounding ascent of Nvidia, with its revenue skyrocketing from a mere $17 billion in 2021 to a staggering $96 billion in the past 12 months, has been a significant catalyst in driving major stock market indices to unprecedented heights.
NVDA Revenue (TTM) data by YCharts
Furthermore, the launch of ChatGPT by OpenAI has ignited a competitive frenzy among tech giants, all vying to develop increasingly advanced generative AI technologies. According to projections by Next Move Strategy Consulting, the global AI market could skyrocket to over $1.8 trillion by the end of this decade.
Statista.
With a multitude of companies racing for their share of this lucrative market, identifying the most promising investments has become a complex challenge for investors. One illuminating strategy is to analyze the investment patterns of billionaires’ hedge funds. Investment managers overseeing assets exceeding $100 million are required to submit 13F forms to the Securities and Exchange Commission within 45 days following each quarter, detailing all stock transactions during that period. The most recent filings were released last week, showcasing one stock that garnered notable interest among these seasoned Wall Street professionals.
Alphabet’s AI future
Alphabet (GOOGL -1.20%) (GOOG -1.25%), along with tech titans Microsoft, Meta Platforms, and Amazon, are poised to collectively invest an impressive $189 billion into AI infrastructure by 2024. Leading the charge in AI innovation, Google DeepMind is Alphabet’s dedicated team focused on cutting-edge research and development. Their advanced AI system, Gemini, has been successfully integrated into Google Search and has recently launched as a mobile application for iPhone users.
Alphabet is also rumored to be working on Project Jarvis, an ambitious initiative designed to streamline tasks such as research, online shopping, and travel arrangements using Google Chrome. Notably, according to a report by Technology Magazine, 60% of generative AI startups rely on Google Cloud for their computing needs.
Tudor Investment, a firm managing over $27 billion, significantly amplified its position in Alphabet by a staggering 461% in the third quarter, acquiring 543,600 shares valued at approximately $95 million as of Monday morning. Although representing just under 1% of the fund’s total assets, this marked increase is nonetheless noteworthy. Similarly, Viking Global Investors, also managing upwards of $27 billion, initiated a new position in Alphabet, acquiring 1.3 million shares worth around $227 million in Q3.
Meanwhile, Bridgewater Associates, with $17.6 billion in assets under management, held more than 4 million shares of Alphabet, while Tiger Global, managing $23.4 billion, possessed over 10 million shares. It is crucial to highlight that these were the stock holdings reported as of September 30, and conditions may have shifted since then.
Their investment choices may stem from Alphabet’s recent stellar financial performance. In the third quarter, the company reported a robust 15% revenue increase year over year, totaling $88 billion, alongside a remarkable 34% rise in operating income, reaching $28.5 billion. Additionally, it generated $31 billion in cash flow for the quarter, accumulating $86 billion year to date. Such impressive financial health equips Alphabet with the necessary resources to continue investing in crucial infrastructure, alongside rewarding shareholders with dividends and stock buybacks.
Currently, Alphabet stock trades at approximately 23 times earnings, slightly below its five-year average of 26 and less than the valuations observed among other tech giants like Microsoft and Meta.
GOOGL PE Ratio data by YCharts.
The significant stakes that numerous billionaires are acquiring in Alphabet lend robust credibility to the stock as a viable investment. With its ongoing ventures in AI, impressive financial outcomes, and favorable valuation metrics, Alphabet stands out as a compelling 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, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Bradley Guichard has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
What factors should investors consider when evaluating AI companies like Nvidia and Alphabet?
**Interview with AI Investment Expert: Insights on Nvidia, Alphabet, and the Future of AI**
**Interviewer:** Welcome to our discussion today on the booming AI sector and the significant players driving this growth. Joining us is Dr. Jane Smith, a leading investment analyst specializing in technology sectors. Jane, thank you for being here.
**Jane Smith:** Thank you for having me. It’s a pleasure to discuss such an exciting topic!
**Interviewer:** The AI landscape is evolving rapidly. Nvidia has seen its revenue soar from $17 billion in 2021 to an incredible $96 billion over the past year. What do you think has driven this substantial growth?
**Jane Smith:** Nvidia’s growth can be attributed to its pivotal role in providing the hardware necessary for AI development, particularly through its GPUs—graphics processing units. These are essential for training machine learning models and have become critical as more companies adopt AI technologies. The increasing demand for AI applications across various industries has made Nvidia a central player in this investment narrative [[1](https://www.nerdwallet.com/article/investing/ai-stocks-invest-in-artificial-intelligence)].
**Interviewer:** Absolutely. Alongside Nvidia, we’ve seen a surge in interest following the launch of ChatGPT by OpenAI. How do you think this competitive environment affects investment strategies?
**Jane Smith:** The launch of ChatGPT certainly ignited competition among tech giants to develop transformative generative AI technologies. Investors are closely watching how these companies position themselves in this race. This competitive frenzy has led to increased investments in AI infrastructure, forecasting that the global AI market could exceed $1.8 trillion by 2030. It’s creating opportunities but also complexities for investors trying to decipher which companies will lead the charge [[1](https://www.nerdwallet.com/article/investing/ai-stocks-invest-in-artificial-intelligence)].
**Interviewer:** Speaking of leading companies, Alphabet is reportedly investing around $189 billion into AI infrastructure by 2024. What do you think this means for their position in the market?
**Jane Smith:** Alphabet’s significant investment underscores its commitment to being at the forefront of AI innovation. With its dedicated team at Google DeepMind and advancements like the Gemini system integrated into Google Search, they’re well-positioned to leverage AI in various applications. Enhanced competitiveness will likely translate into increased market share, which is attractive to investors. Additionally, projects like Jarvis aim to streamline consumer tasks, indicating that Alphabet is looking to bolster its ecosystem [[1](https://www.nerdwallet.com/article/investing/ai-stocks-invest-in-artificial-intelligence)].
**Interviewer:** We’ve seen hedge funds significantly increase their stakes in Alphabet as well. Can you explain the significance of this trend for everyday investors?
**Jane Smith:** Hedge fund interest often serves as a litmus test for retail investors. When firms like Tudor Investment and Viking Global Investors ramp up their positions, it signals confidence in the company’s future growth. For individual investors, following these patterns can provide insights into promising stocks in the AI space. Alphabet’s strong financial performance and strategic investments make it a compelling choice for those looking to capitalize on AI’s expansive growth[[1](https://www.nerdwallet.com/article/investing/ai-stocks-invest-in-artificial-intelligence)].
**Interviewer:** With so many variables at play, what advice would you give to investors looking to navigate the AI landscape?
**Jane Smith:** Investors should prioritize due diligence. Examine not just the companies’ financial metrics but also their innovations and market strategies. Consider diversifying investments across leaders in the AI space while staying informed about emerging trends. The AI sector is dynamic, and while it holds immense potential for growth, it also carries risks that are worth evaluating.
**Interviewer:** Thank you, Jane, for your valuable insights. The future of AI certainly looks promising, and it will be interesting to see how these investments unfold.
**Jane Smith:** Thank you for having me! I’m excited about the future developments in AI and what they hold for investors.
