Baron Funds: Asset Management Successes with Alphabet Inc.

Baron Durable Advantage Fund 2025 Third Quarter Performance

Baron Funds has published the investor letter for the third quarter of 2025. During this period, the corporate shares of the Baron Durable Advantage Fund increased by 5.6%, while the S&P 500 Index gained 8.1%. Since the beginning of the year, the fund has recorded a 13.6% increase, while the index has risen by 14.8%. As of 2025, large-cap equity investors in the U.S. continue to achieve significant gains. This rally, which has been ongoing since the beginning of 2023, remains strong in the third quarter.

The Baron Durable Advantage Fund highlighted significant stocks such as Alphabet Inc. (NASDAQ:GOOG) in its letter. Alphabet Inc., as the parent company of Google, offers various platforms and services including Google Services, Google Cloud, and Other Bets. In the past month, the shares of Alphabet Inc. (NASDAQ:GOOG) increased by 13.63%, and they have gained 59.04% over the last 52 weeks. On November 17, 2025, shares of Alphabet Inc. closed at $285.60 each, with a market capitalization of $3.448 trillion.

The Baron Durable Advantage Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG):

"Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, the world's largest search and online advertising company. Share values increased by 37.4% during the quarter due to strong performance in the company's core businesses as well as Google Cloud and Other Bets. Despite the increasing use of AI competitors such as ChatGPT, Google Search and YouTube achieved over 10% revenue growth year-on-year. Additionally, the number of clicks on Google Search increased compared to last year, Google's AI assistant Gemini ranked first in Apple's App Store, and Gemini Pro 2.5 placed at the top of the AI assessment ranking LMArena. Announcements regarding new AI-enabled features for Chrome were also made. Cloud revenue growth accelerated to 32% year-on-year due to increased demand for AI cloud services. On the other hand, a more favorable outcome in the Department of Justice's antitrust case regarding Google Search reduced uncertainty around the stock. While we will continue to monitor the long-term potential impact of AI chatbots on search, we believe that Alphabet's expansive AI capabilities and expertise will stand out in the market."

Alphabet Inc. (NASDAQ:GOOG) ranks seventh on the list of popular stocks among hedge funds. According to our database, as of the second quarter, Alphabet Inc. (NASDAQ:GOOG) was included in the portfolios of 178 hedge funds; this number was 164 in the previous quarter. In the third quarter of 2025, Alphabet Inc. achieved its first $100 billion in revenue in its history. While we acknowledge the investment potential of Alphabet Inc., we believe that some AI stocks offer better earning potential and carry lower risk.

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