The London Company Investment Letter: Stocks Powered by AI

Third Quarter 2025: Positive Developments in the American Stock Market

The London Company, an investment management firm, published its third quarter 2025 investor letter. U.S. stocks continued their rise 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 delivered a return of 6.3% (6.2% net), while the Russell 1000 Index gained 8.0%. You can review information about the fund's top 5 stocks to identify its best picks 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 its Google Services, Google Cloud, and Other Bets segments. Alphabet Inc. (NASDAQ:GOOG) had a monthly return of 12.97%, while its stock gained 66.46% over the past 52 weeks. On November 3, 2025, Alphabet Inc. (NASDAQ:GOOG) shares closed at $284.12 per share, with a market capitalization of $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 after strong core business results and rapid adoption of AI offerings. Positive news regarding ongoing legal cases also helped. Management is effectively implementing cost-saving initiatives while diversifying revenue through Cloud and subscriptions. Our appeal continues in light 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 Alphabet Inc. (NASDAQ:GOOG) stock; 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 acknowledge the investment potential of Alphabet Inc. (NASDAQ:GOOG), we believe certain AI stocks have higher upside potential and lower risk. If you are looking for an AI stock that will significantly benefit from Trump's tariffs and has a low valuation, don't miss our free report on the best short-term AI stocks.

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