--- title: "Why One Portfolio Manager Still Likes Alphabet Stock (GOOGL) Despite AI Spending Fears" type: "News" locale: "en" url: "https://longbridge.com/en/news/293973238.md" description: "DCLA managing partner Sarat Sethi remains bullish on Alphabet (GOOGL) despite AI spending concerns, citing its diversified businesses like YouTube and Cloud as key strengths. He contrasts this with Microsoft's heavy R&D costs and notes a market shift toward software over costly hardware infrastructure. Additionally, Sethi highlights healthcare stocks as attractive due to low S&P 500 weighting. Wall Street maintains a Strong Buy consensus for GOOGL with an average price target of $427.35." datetime: "2026-07-27T20:35:35.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/293973238.md) - [en](https://longbridge.com/en/news/293973238.md) - [zh-HK](https://longbridge.com/zh-HK/news/293973238.md) --- # Why One Portfolio Manager Still Likes Alphabet Stock (GOOGL) Despite AI Spending Fears DCLA managing partner Sarat Sethi is becoming more cautious about the huge amounts of money that tech companies are spending on AI. While he understands that firms feel pressure to keep up with rivals, he told _CNBC_ that he would like to see more discipline, especially from companies that aren't Alphabet (GOOGL). In his view, Alphabet remains a core holding because it has several strong businesses that can support one another. ### Claim 55% Off TipRanks High conviction IBM bulls now have this Tradr ETF Indeed, its YouTube and Cloud operations give management more flexibility, while Gemini provides another way to compete in AI. This flexibility is important because recent earnings reports suggest that companies are becoming more careful with hardware spending. Customers appear to be delaying some large equipment purchases while continuing to spend on software and cybersecurity. Sethi pointed to comments from IBM (IBM) and SAP (SAP) as signs of this change. The market's reaction has supported the idea as well. For instance, Salesforce (CRM) led the Dow higher with a gain of nearly 6%. Therefore, it seems like investors are rewarding companies that can grow without relying on costly infrastructure spending. ## **Microsoft Could Face More Pressure** Separately, Microsoft (MSFT) could face more pressure in this environment. The stock is already down by double digits this year, and the company continues to spend heavily on research and development. Because of that, Sethi believes that Microsoft may need to prove the return on its AI investments sooner than some of its peers. If the payoff takes longer than expected, investors could become even less patient. Meanwhile, Sethi sees an opportunity outside technology. He believes that money is starting to move back toward healthcare companies with strong cash flow and dependable earnings. In fact, the healthcare sector (XLV) now has its smallest weighting in the S&P 500 (SPY) ever, which may make it more attractive for investors looking for stability. ## **Are GOOGL Shares a Good Buy?** Turning to Wall Street, analysts have a Strong Buy consensus rating on GOOGL stock based on 31 Buys and five Holds assigned in the past three months. Furthermore, the average GOOGL price target of $427.35 per share implies 30.6% upside potential. (See GOOGL Stock Forecast). ### Related Stocks - [GOGL.US](https://longbridge.com/en/quote/GOGL.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [GOOW.US](https://longbridge.com/en/quote/GOOW.US.md) - [GOU.US](https://longbridge.com/en/quote/GOU.US.md) - [GOOL.US](https://longbridge.com/en/quote/GOOL.US.md) - [GGLS.US](https://longbridge.com/en/quote/GGLS.US.md) - [GGLL.US](https://longbridge.com/en/quote/GGLL.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [MSFX.US](https://longbridge.com/en/quote/MSFX.US.md) - [MSFD.US](https://longbridge.com/en/quote/MSFD.US.md) - [MSFL.US](https://longbridge.com/en/quote/MSFL.US.md) - [MSFO.US](https://longbridge.com/en/quote/MSFO.US.md) - [MSFU.US](https://longbridge.com/en/quote/MSFU.US.md) - [MSFW.US](https://longbridge.com/en/quote/MSFW.US.md) - [MSFY.US](https://longbridge.com/en/quote/MSFY.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [GOOY.US](https://longbridge.com/en/quote/GOOY.US.md) - [GOOX.US](https://longbridge.com/en/quote/GOOX.US.md) - [GOOP.US](https://longbridge.com/en/quote/GOOP.US.md) - [IBM.US](https://longbridge.com/en/quote/IBM.US.md) - [SAP.US](https://longbridge.com/en/quote/SAP.US.md) - [SAP.DE](https://longbridge.com/en/quote/SAP.DE.md) - [CRM.US](https://longbridge.com/en/quote/CRM.US.md) - [XLV.US](https://longbridge.com/en/quote/XLV.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) ## Related News & Research - [Alphabet Stock Fell 7% after Earnings. 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