The London Company Investment Letter: Stocks Powered by AI

Third Quarter 2025: Positive Developments in the U.S. Stock Market

The London Company, an investment management firm, has published its third quarter 2025 investor letter. U.S. stocks continued their rise during this quarter due to Federal Reserve interest rate cuts, solid corporate earnings, and interest in artificial intelligence (AI). Despite mixed economic data released in the third quarter, the economy maintained its momentum from the second quarter.

Throughout the third quarter, the portfolio achieved a return of 6.3% (6.2% net), while the Russell 1000 Index gained 8.0%. You can review information about the top 5 stocks in the investment fund to determine the best selections for 2025.

The London Company highlighted stocks like Alphabet Inc. (NASDAQ:GOOG) in its third quarter 2025 investor letter. Alphabet Inc., the parent company of Google, offers various platforms and services through Google Services, Google Cloud, and Other Bets segments. The one-month return for Alphabet Inc. (NASDAQ:GOOG) shares was 12.97%, and their price increased by 66.46% over the last 52 weeks. On November 3, 2025, Alphabet Inc. (NASDAQ:GOOG) shares closed at $284.12 per share, and the market capitalization was determined to be $3.426 trillion.

The London Company stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its investor letter:

"Alphabet Inc. (NASDAQ:GOOG) – GOOG performed best following robust core business results and the rapid adoption of AI offerings. Positive news regarding ongoing legal cases also helped. Management effectively executes cost-saving initiatives while diversifying revenue through Cloud and subscriptions. Our appeal remains in the face of comprehensive ecosystem scale, solid capital allocation, and a clean balance sheet."

Alphabet Inc. (NASDAQ:GOOG) ranks 7th on our list of the 30 most popular stocks among hedge funds. According to our database, as of the second quarter of 2025, 178 hedge fund portfolios held shares of Alphabet Inc. (NASDAQ:GOOG); this number was 164 in the previous quarter. In the third quarter of 2025, Alphabet Inc. (NASDAQ:GOOG) achieved $100 billion in revenue for the first time. While we recognize the investment potential of Alphabet Inc. (NASDAQ:GOOG), we believe that certain AI stocks have higher upside potential and carry less risk. If you're looking for an AI stock with low values that will significantly benefit from the customs tariffs from the Trump era, don’t miss our free report on the best short-term AI stocks.

Additionally, in another article, we shared a list of the best monopoly stocks related to Alphabet Inc. (NASDAQ:GOOG). Please check our hedge fund investor letter page to access more investor letters about the third quarter of 2025.