Alphabet (GOOG) Rallies on YouTube Ad Growth and Double-Digit Cloud Revenue Gains

Impax Asset Management’s “Impax US Sustainable Economy Fund” released its Q4 2025 investor letter. A copy of the letter can be downloaded here. The fund reported that equity markets remained volatile during the quarter amid concerns over elevated valuations and financing for large-scale data center investments, although the portfolio modestly outperformed the Russell 1000 benchmark on the back of sustainability tilts and stock-specific gains, particularly within Health Care and Financials. On an annual basis, the Fund’s Institutional Class delivered a total return of 16.00% in 2025, compared to 17.37% for the Russell 1000, reflecting the impact of sector allocation and company-level developments such as gains in pharmaceutical and payment processing holdings and weakness in certain Consumer Staples names. Management noted that performance was influenced more by changing market leadership than macroeconomic deterioration, while maintaining a cautiously optimistic outlook supported by falling interest rates, resilient corporate earnings, and continued investment in structurally advantaged businesses positioned to benefit from the transition toward a more sustainable economy. In addition, please check the Fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Impax US Sustainable Economy Fund highlighted stocks like Alphabet Inc. (NASDAQ:GOOG). Alphabet Inc. (NASDAQ:GOOG) operates leading digital platforms, including Google Search and YouTube, while expanding its cloud computing and AI capabilities to capture growth in digital advertising and enterprise services. The one-month return of Alphabet Inc. (NASDAQ:GOOG) was -7.78% while its shares traded between $142.66 and $350.15 over the last 52 weeks. On February 17, 2026, Alphabet Inc. (NASDAQ:GOOG) stock closed at approximately $302.82 per share, with a market capitalization of about $3.66 trillion.

Impax US Sustainable Economy Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2025 investor letter:

“Alphabet Inc. (NASDAQ:GOOG) (Communication Services, Interactive Media & Services), an underweight position, was one of the top performers in the period. The position is held for its exposure to Digital Infrastructure and Education, Enhanced Skills & Innovation opportunities. Share price performance was driven by robust advertising revenue growth, particularly from YouTube and Search, as digital advertising spending rebounded during the holiday season. Cloud revenues saw double-digit growth and margin improvement, while cost optimization initiatives boosted profitability, leading to positive investor sentiment. The portfolio was overweight the Class A shares at the end of the period.”

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Alphabet Inc. (NASDAQ:GOOG) is in 7th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 186 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOG) at the end of the third quarter, which was 178 in the previous quarter. While we acknowledge the risk and potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Alphabet Inc. (NASDAQ:GOOG) and shared Billionaire David Tepper’s investment strategy and his favorite stocks. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.