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Sometimes it’s useful to check out stocks that experts really like. By experts, we mean highly successful investors and analysts who spend a lot of time researching stocks.
Bill Ackman is a great example of a highly successful investor. He amassed a fortune of nearly $4 billion thanks to shrewd moves with his own hedge fund, Pershing Square Capital Management.
This millionaire investor doesn’t like many stocks. And some of them are not supported by Wall Street. However, there is at least one notable exception. Ackman owns $1.8 billion in the stock, and 38 Wall Street analysts recommend it as a buy now.
Ackman’s top stocks
Mr. Ackman does not like to build highly diversified portfolios. Pershing Square Capital Management only owns eight stocks, but two of the stocks in Ackman’s portfolio belong to one company.he owns Alphabet class A (Google 2.02%) stocks and Alphabet class C (GOOG 2.06%) KK.
Combining both types of stocks, Google’s parent company Alphabet ranks at the top of Mr. Ackman’s holdings. Pershing Square’s stake in the tech giant is currently worth just above the aforementioned $1.8 billion level.
This is not a position that Ackman has held for many years. He began his position at Alphabet in early 2023. When the hedge fund CEO first bought the stock, his stock price was falling due to a mishandling of the launch of the generative artificial intelligence (AI) app Bird. Many investors thought Alphabet was being left behind by OpenAI’s ChatGPT.
But Ackman saw great opportunity in this backlash. As he told CNBC in September 2023, he believes Alphabet “is going to be a dominant player in the AI space for a very long time.”
Wall Street is full of alphabet bulls.
Wall Street largely agrees with Ackman on Alphabet.financial information company LSEG We surveyed 43 analysts who cover the same stock. 13 people rate Alphabet as a “strong buy” and another 25 recommend it as a buy.
What will happen to the remaining five analysts? All recommended holding Alphabet stock, and none thought it should be sold.
To be sure, many on Wall Street don’t expect Alphabet stock to soar this year after its explosive 58% rise in 2023. The average 12-month price target reflects modest upside of about 9%.
Argus analyst Joseph Bonner’s view of Alphabet is probably representative of quite a few others on Wall Street. “Alphabet remains a minimally competitive, if not a leader, in developing generative AI, perhaps the new computing paradigm,” Bonner recently wrote to investors. He added that Argus is “positive and believes in Alphabet’s underlying business.”[s] I think the value of GOOGL stock is attractive. ”
Are Ackman and the analysts right about Alphabet?
Even so-called experts can be wrong. But in this case, I think both Ackman and Wall Street analysts are right on the mark when it comes to Alphabet.
There is no doubt that the company is one of the leaders in AI development. We hope that the release of Gemini Ultra will be a good start for Google Cloud.
Alphabet revealed in December 2023 that Gemini Ultra outperformed current state-of-the-art AI models (often OpenAI’s GPT-4) in 30 out of 32 benchmarks. The new AI model also outperformed human experts for the first time in an MMLU (massive multitasking language understanding) test with 57 subjects.
I don’t think Google Search faces an existential threat from AI either. On the contrary, Alphabet could benefit from AI integration. A good example is Circle to Search, which Google recently introduced for Android smartphones. It’s a way to find any information with quick gestures without having to switch apps.
The company and its stock could face some challenges along the way (including an antitrust investigation). But I fully expect Alphabet to be a big winner in the long run, as it has been since its 2004 initial public offering (IPO).
Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Keith Speights holds a position at Alphabet. The Motley Fool has a position in and recommends Alphabet. The Motley Fool has a disclosure policy.
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