Alphabet(US:GOOG) The Motley Fool·2025-01-05 09:35Billionaire Hedge Fund Managers' Portfolio Insights - Prominent billionaire hedge fund managers, including Bill Ackman, Chase Coleman, and Chris Hohn, collectively worth an estimated $25 billion, are worth monitoring for potential investment opportunities [1] - These managers share a common interest in a major tech stock, which has shown strong performance and resilience [2] Alphabet's Performance and Recovery - Alphabet's shares fell 39% in 2022 due to weakening conditions in the digital-advertising market and recession fears sparked by aggressive interest rate hikes [3] - The stock has rebounded significantly, gaining 115% since the start of 2023, benefiting long-term investors like Ackman, Coleman, and Hohn [4] - Alphabet's revenue grew 9% year over year in 2023 and 15% through the first nine months of 2024, driven by a resilient digital-ad industry and AI advancements [5] Financial Metrics and Efficiency - Alphabet's operating margin improved from 26% in 2022 to 32% in Q3 2024, reflecting cost-cutting measures and streamlined operations [6] - The stock's price-to-earnings (P/E) ratio increased by 44% since 2023, but at 25.2, it remains on par with the S&P 500 and is the cheapest among the "Magnificent Seven" group [7][8] Future Growth Prospects - Wall Street analysts project Alphabet's revenue and earnings per share to grow at compound annual rates of 11% and 13%, respectively, between 2024 and 2026 [10] - The company is well-positioned to benefit from digital advertising growth, cloud computing, streaming entertainment, and its Waymo division's potential in autonomous driving technology [11] - These factors create a favorable environment for sustained revenue growth and higher earnings, offering compelling returns for investors [12]