Why Alphabet (GOOGL) Is Proving AI Can Strengthen Its Search Business

The Aristotle Value Equity Fund's Q2 2026 investor letter discusses Alphabet Inc. (NASDAQ:GOOGL) as a key holding, noting the company's strong position in search and cloud services. The fund initiated its position in Alphabet in Q1 2025 when AI-generated concerns were present. Since then, Alphabet has shown resilience with its core businesses, particularly Google Search benefiting from AI-powered features and increased user engagement.

Google Cloud also benefited from robust enterprise demand for AI infrastructure and services. Alphabet's ability to monetize these advancements through advertising, distribution, and integration across a broad user base is highlighted as a key advantage. The letter also notes that while regulatory risks, capital intensity, and shifts in search behavior are monitored, recent execution reinforces Alphabet's high-quality business status with long-term value creation potential.

Alphabet Inc. is ranked 3rd among the top 40 most popular stocks among hedge funds heading into 2026, with 265 hedge fund portfolios holding the stock as of the end of Q1 2026.