Cambiar Opportunity Fund, managed by Cambiar Investors, published its Q2 2026 investor letter highlighting Alphabet Inc. (NASDAQ: GOOGL) as a company that has effectively answered investor concerns regarding the return on investment for artificial intelligence spending. The fund noted that while hyperscalers face scrutiny over large capital expenditure budgets, Alphabet's financial performance indicates that demand is not a constraint for its AI infrastructure.
In the letter, Cambiar Opportunity Fund explained that Alphabet previously traded at below-market multiples when investors believed the company had fallen behind in the AI race. In response, the company aggressively ramped up investment to embed AI across its products. The fund stated that Alphabet's core search business is now growing faster than it has in over a decade, excluding the pandemic period. The most recent earnings report showed that the company is monetizing capacity as fast as it is installed, which the fund described as a resounding answer to questions about adequate returns on AI spending.
The fund emphasized that Alphabet continues to generate prodigious levels of cash flow and should remain solidly free cash flow positive in 2026. This projection excludes additional liquidity levers, such as the company's approximately 5% ownership stake in SpaceX. Cambiar Opportunity Fund attributed its underweight position in technology stocks, which caused the fund to lag the Russell 1000 Value Index in Q2, to a portfolio construction focus on broad ownership across diverse sectors rather than a lack of conviction in specific names like Alphabet.
Alphabet Inc. (NASDAQ: GOOGL) closed at $344.08 per share on September 30, 2026. The stock declined 0.70% over the past month but is up 38.41% over the past year. The company has a market capitalization of $4.19 trillion. According to Insider Monkey data, 275 hedge fund portfolios held Alphabet shares at the end of the second quarter, an increase from 265 in the previous quarter. This places Alphabet third on a list of the 40 most popular stocks among hedge funds.
The Q2 2026 market environment saw a significant rebound, with the S&P 500 rising 15.2% and the Russell 2000 up 21.5%. Growth stocks outperformed value stocks during the quarter, although value retained a year-to-date lead. Technology and AI stocks fueled much of this market rise, now accounting for nearly 50% of the S&P 500. Cambiar Opportunity Fund noted that while the demand for advanced AI chips represents a structural opportunity in the semiconductor sector, extreme valuation metrics warrant caution despite strong profit margins. The fund's Q2 gain of 11.58% trailed the Russell 1000 Value Index's 13.87% gain.
The investor letter also referenced future uncertainties, including geopolitical conflicts and AI disruption, which may challenge economic growth and specific company earnings. While the fund highlighted Alphabet's strong position, it maintained that certain other AI stocks offer greater upside potential and carry less downside risk.