Alphabet Stock’s Weakness Was Wall Street’s Opportunity

Key Points

• Over the past 12 months, institutions bought $126.6 billion worth of Alphabet stock, with a net inflow of $69B despite regulatory and competitive headwinds.
• Pershing Square, Bridgewater Associates, and John Paulson all expanded stakes, signaling long-term conviction in Alphabet’s fundamentals.
• Strong earnings and a recent favorable antitrust ruling have lifted sentiment, sending analyst price targets higher as Alphabet shifts from laggard to leader and market outperformer.

Institutional ownership often serves as one of the clearest signals of conviction in a company’s long-term prospects. When the world’s most prominent hedge funds, asset managers, and pension funds allocate billions into a stock, they aren’t chasing short-term moves; they’re making a bet on enduring growth and stability.

Few companies exemplify this better right now than tech giant Alphabet NASDAQ: GOOGL.

Despite a stretch earlier this year when the tech giant lagged the broader market and peers like Microsoft and NVIDIA, institutions not only held firm but doubled down. Regulatory and legal challenges, competitive pressures in AI, and questions around growth weighed on sentiment for much of the first half of 2025.

Yet throughout that period, institutional investors continued to see value in Alphabet’s fundamentals, buying aggressively into weakness. Now, with sentiment shifting and recent catalysts reigniting momentum and new all-time highs, that conviction is paying off.

Institutions Went Shopping in Alphabet

The scale of institutional activity around Alphabet over the past year has been nothing short of staggering. Over the last 12 months, institutions purchased a massive $126.6 billion worth of Alphabet stock. In that same period, just $57.5 billion was sold, leaving a net inflow of roughly $69 billion. That kind of buying power underscores not only confidence but also a clear signal that the smart money viewed Alphabet’s weakness as an opportunity.

Much of this activity came during the company’s most challenging stretch in years. Through Q1 and Q2, Alphabet faced heightened regulatory pressure, ongoing scrutiny of its advertising dominance, and rising concerns about competition in AI search and cloud services.

Meanwhile, the stock significantly underperformed both the Nasdaq and fellow megacap peers. Yet for institutions, these headwinds were exactly the conditions to build positions. Valuations had dipped to historically attractive levels, with Alphabet trading at a P/E ratio well below its long-term average. To the biggest buyers on Wall Street, that combination of strong fundamentals and compressed multiples looked irresistible.

Prominent Names Behind the Buying

Among the most notable buyers was Bill Ackman’s Pershing Square fund, which expanded its Alphabet stake considerably in Q2. Pershing now owns 6.3 million shares of Alphabet NASDAQ: GOOG stock and 5.36 million shares of GOOGL stock, boosting its GOOGL position by more than 20% over the prior quarter. Together, the Alphabet positions account for nearly 15% of Pershing’s portfolio, a massive vote of confidence in Alphabet’s long-term trajectory.

Other hedge fund heavyweights have followed suit. Billionaire investor John Paulson added 9,000 shares of Alphabet in Q2 through his firm Paulson & Co., further underscoring the appetite among top-tier managers. Bridgewater Associates executed one of the more eye-catching moves, increasing its stake in GOOGL by 84% during the second quarter. That lift brought its total position to 5.6 million shares, representing nearly 4% of its portfolio. For a fund as diversified as Bridgewater, that’s a significant weighting.

Catalysts Turning the Tide

Alphabet’s most recent earnings report reinforced the company’s core strengths, with cloud revenue growth reaccelerating and advertising continuing to deliver resilient results.

Just as significantly, a significant legal overhang has now cleared. A judge’s recent antitrust ruling not only eased fears of a potential breakup around Google’s Chrome browser but also framed Alphabet as better positioned than initially feared to navigate competitive and legal threats.

Those developments have helped re-rate the stock in recent weeks. Analysts have steadily lifted their outlooks, with the average price target climbing from $199.75 three months ago to $221.44 as of Sept. 9. 

With the company now moving from laggard to leader and momentum returning to the stock, the institutions that built positions during Alphabet’s slump are seeing their patience rewarded.