Soumya Eswaran
3 min read
In This Article:
Weitz Investment Management, an investment management firm, released its “Multi-Cap Equity Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund’s Institutional Class returned +0.81% in the first quarter compared to -4.72% for the Russell 3000. In late January, the “AI Trade” faced a challenge when the Chinese company DeepSeek revealed that it had created an advanced AI model significantly lower cost than its U.S. counterparts. This announcement resulted in increased scrutiny from investors regarding the spending strategies of US firms. Investors' and corporate leaders' confidence is challenged by uncertainties related to trade and tariffs, which causes equities to decline as the quarter draws to a close. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.
In its first-quarter 2025 investor letter, Weitz Multi-Cap Equity Fund highlighted stocks such as Alphabet Inc. (NASDAQ:GOOG). Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services operating through Google Services, Google Cloud, and Other Bets segments. The one-month return of Alphabet Inc. (NASDAQ:GOOG) was 3.50%, and its shares lost 3.82% of their value over the last 52 weeks. On May 23, 2025, Alphabet Inc. (NASDAQ:GOOG) stock closed at $169.59 per share with a market capitalization of $2.05 trillion.
Weitz Multi-Cap Equity Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q1 2025 investor letter:
"On the negative side of the ledger, Alphabet Inc. (NASDAQ:GOOG) was the Fund’s top detractor. The company’s Google unit is on the front lines of the “Traditional Search vs. GenAI” battle. With its own GenAI capabilities embedded in Google Search results, it’s helpful that Alphabet has a foot in each camp. Nevertheless, investors fear a significant shift of search share in favor of competitors, specifically ChatGPT. We believe the debate is far from settled and has overshadowed other strong businesses inside Alphabet (YouTube, to name one). We elected to reduce our position size early in the quarter to reflect the heightened competitive pressures."
A laptop and phone open to Google's services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 164 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the first quarter which was 174 in the previous quarter. In the first quarter of 2025, Alphabet Inc. (NASDAQ: GOOG) achieved a revenue of $90.2 billion, representing an increase of 12% or 14% in constant currency. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
