“Alphabet Inc. emerged as the top performer in Giverny Capital Asset Management’s portfolio for 2025, delivering a 4.7% contribution to overall returns through a 66% stock gain, fueled by robust earnings growth of around 30% and advancements in AI-driven businesses like search, cloud, and autonomous driving.”
Giverny Capital Asset Management wrapped up 2025 with a portfolio return of 12.58%, trailing the S&P 500’s 17.88% advance but still marking solid progress amid a market dominated by mega-cap technology stocks. The firm’s strategy emphasizes ownership in high-quality businesses across various sectors, blending large tech holdings with mid-cap leaders in niche industries. This approach led to a diversified exposure that cushioned against volatility while capitalizing on select outperformers.
Alphabet stood out as the premier driver of gains, holding an average portfolio weight of 8.8% throughout the year. Its shares delivered a total return of 66%, translating directly into that 4.7% boost to the fund’s overall performance. This success stemmed from a combination of market enthusiasm for artificial intelligence integrations and tangible operational improvements across Alphabet’s ecosystem.
Breaking Down Alphabet’s Stellar Year
Alphabet’s financial health remained a cornerstone of its appeal. Earnings expanded by approximately 30% in 2025, building on a compound annual growth rate in the high teens since 2021. This consistent profitability underscores the company’s ability to monetize its vast user base and innovate in competitive landscapes. Revenue milestones were hit, including surpassing $100 billion in a single quarter for the first time, reflecting strength in advertising, subscriptions, and emerging ventures.
The stock’s momentum carried into early 2026, with shares closing at $338.66 on the latest trading day, boasting a market capitalization exceeding $4 trillion. Over the past month, returns have climbed 7.4%, while the 52-week period shows a 64.72% appreciation, outpacing many peers in the tech sector.
Key Business Segments Fueling Growth
Alphabet’s diversified operations provided multiple avenues for value creation. The core Google Services segment, encompassing search and advertising, benefited immensely from enhancements via the Gemini AI model. This tool has refined query accuracy and user engagement, solidifying Alphabet’s dominance in digital advertising where it commands a significant share of global spend.
YouTube, another pillar, continued its trajectory as a leading video platform, drawing billions in ad revenue while expanding into premium content and short-form videos. Growth here was bolstered by algorithmic improvements powered by machine learning, which increased watch times and advertiser ROI.
Google Cloud emerged as a high-growth engine, capitalizing on the AI infrastructure boom. Enterprises increasingly migrated to cloud solutions for data storage, analytics, and AI training, with Alphabet investing heavily in data centers to support this demand. Partnerships with major corporations amplified adoption, positioning Google Cloud as a formidable challenger to rivals in the space.
Beyond these, the Other Bets category showcased innovative potential. Waymo, the autonomous driving unit, advanced toward broader commercialization with expanded robotaxi services in select U.S. cities. Pilot programs demonstrated safety improvements and cost efficiencies, hinting at future scalability in urban mobility.
Portfolio Context and Comparative Performance
Within Giverny Capital’s holdings, Alphabet’s contribution dwarfed others, but the fund saw balanced input from a roster of strong performers. The top five contributors collectively accounted for nearly all of the year’s gains, highlighting the impact of concentrated bets on quality names.
| 2025 Top Contributors | Average Weight (%) | Total Return (%) | Contribution to Return (%) |
|---|---|---|---|
| Alphabet Inc. (GOOG) | 8.8 | 66.0 | 4.7 |
| Medpace Holdings, Inc. | 4.4 | 69.1 | 2.3 |
| Arista Networks, Inc. | 9.5 | 18.5 | 2.1 |
| Charles Schwab Corp. | 5.6 | 36.6 | 2.0 |
| Installed Building Products, Inc. | 4.1 | 50.6 | 1.8 |
These selections reflect Giverny’s focus on companies with durable competitive advantages. For instance, Arista Networks complemented Alphabet’s AI theme by providing essential networking gear for data centers, while Charles Schwab leveraged market rallies to attract record client assets.
On the flip side, the fund navigated headwinds from underperformers, including declines in automotive retail and software sectors. Positions in smaller-cap firms, which made up 45% of the portfolio versus just 12.5% in the S&P 500, faced broader market skepticism amid AI hype favoring giants. Yet, Giverny’s overweight in mid-caps—28% in companies under $18 billion market cap—positions it for potential rebounds as economic cycles shift.
Strategic Insights from the Year
Giverny’s management highlighted the resilience of their holdings against disruptive technologies. While AI captivates investors, the fund’s mix includes businesses unlikely to be upended, such as insurance providers, building suppliers, and financial services firms that could actually enhance operations through AI adoption. Alphabet exemplifies this, as its internal AI applications streamline costs and boost product efficacy, reducing reliance on external monetization.
The firm’s long-term orientation shone through, with core holdings like Alphabet retained since inception in 2020. This patience has yielded annualized returns of 18% net since then, though slightly below the S&P 500’s 20.26%. Multi-year metrics show three-year returns at 20.72% and five-year at 12%, demonstrating steady compounding despite annual variances.
Market Positioning and Investor Sentiment
Alphabet’s appeal extends beyond Giverny, with 186 hedge funds holding positions at the end of the third quarter of 2025, up from 178 previously. This institutional backing signals confidence in its trajectory, particularly as AI investments mature. Challenges persist, including regulatory scrutiny on data practices and competition in cloud computing, but Alphabet’s scale—serving billions of users daily—provides a moat.
Looking at broader trends, the tech sector’s bifurcation saw mega-caps like Alphabet thrive while smaller innovators lagged. Giverny’s underweight in the “Magnificent Seven” (holding only two at 17.4% weight) contributed to relative underperformance, but the strategy bets on quality over momentum. As AI infrastructure buildouts evolve, beneficiaries like Alphabet are poised to capture value from both building and utilizing advanced tech.
Operational Excellence and Future Catalysts
Delving deeper into Alphabet’s operations, capital allocation remained prudent. Share repurchases and dividends supported shareholder returns, with the company returning billions to investors in 2025. Investments in R&D, particularly in quantum computing and healthcare via Verily, promise long-tail growth opportunities.
Waymo’s expansion merits special note: operational in multiple states, it logged millions of autonomous miles with incident rates below human drivers. This could disrupt ride-hailing and logistics, adding new revenue streams as regulations ease.
Google Cloud’s momentum, with triple-digit growth in AI workloads, positions Alphabet to challenge market leaders. Tools like Vertex AI enable businesses to build custom models, fostering sticky ecosystems.
In search, Gemini’s multimodal capabilities—handling text, images, and code—elevate user experiences, countering threats from alternative engines. YouTube’s integration of shopping and live events further diversifies income, tapping e-commerce trends.
Overall, Alphabet’s 2025 performance at Giverny underscores a thesis of owning exceptional asset collections that compound value through innovation and efficiency.
Disclaimer: This news report is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All sources are considered reliable but not guaranteed for accuracy, and investments involve risks including potential loss of principal.