Alphabet, Apple, and Meta Platforms Were Top Billionaire Investor Buys in Q2. Should Retail Investors Follow Suit?

Billionaire investors were busy in Q2 buying shares of tech titans Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), Apple (NASDAQ: AAPL), and Meta Platforms (NASDAQ: META). The three are among the largest companies in the world, with some of the most iconic tech businesses on the planet.

Let's dive into why these three growth stocks remain attractive investments that were recently bought by billionaire investors.

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Alphabet

Alphabet saw some big-name billionaire investors buy the stock in Q2, with the likes of Warren Buffett's Berkshire Hathaway and Renaissance Technologies' Jim Simons adding to their holdings during the quarter.

There are many reasons to like Alphabet. The company's core Google search business continues to have a large distribution moat through its ownership of the Chrome browser and Android smartphone operating system, as well as a revenue-sharing deal to be the default browser on Apple devices. Meanwhile, AI-powered tools, such as AI mode and AI Overviews, have increased queries and driven revenue growth.

In addition, the company's cloud computing business has been the fastest-growing of the big three cloud providers, with revenue surging 82% last quarter. The company also has a significant advantage in this area with its tensor processing units (TPUs), which give it a significant cost advantage over rivals that largely rely on graphics processing units (GPUs). The company has even started selling TPUs outside Google Cloud to select large customers, such as Anthropic, adding another high-margin revenue stream.

As the most complete AI company with top chips and models, Alphabet looks like a long-term AI winner.

Apple

Another stock that saw some billionaire buying in Q2 was Apple, with George Soros and Jeff Gendell of Tontine Partners both adding shares. While Apple's stock is not cheap, the company has arguably one of the best compounding business models on the planet.

The secret to Apple's business model is its closed ecosystem. Once a consumer buys an Apple device and starts taking photos, buying apps, and subscribing, they tend to get locked in. This, in turn, leads to greater use of high-margin Apple services, such as cloud storage, commissions on app purchases and subscriptions, and Apple Pay. The company also makes a tremendous profit from its revenue-sharing deal with Alphabet, under which it gets a 36% cut of search ad revenue generated by queries through its Safari browser.

Apple maintains a strong leadership position at the high end of the smartphone, PC, and device markets, all of which tend to have predictable replacement cycles. This creates a relatively repetitive revenue stream, while its services business continues to consistently compound at a high rate of return. Given this business model, Apple is a top stock to own long-term.

Meta Platforms

Meta was a popular buy among hedge fund billionaires in Q2, with Bill Ackman, Jim Simons, and Lee Anslie of Maverick Capital, among the buyers. It's easy to see why hedge funds were scooping up shares of the social media giant last quarter. The stock has been beaten down on concerns of its aggressive spending on AI infrastructure and is only trading at a forward P/E of 16 times 2027 analyst estimates.

Meta has been one of the best companies at harnessing the power of AI to drive growth at its core business. Its social media platform is a great flywheel business, where AI keeps users on the platform longer while also helping advertisers serve more relevant ads and achieve better conversions. This is leading to both more ad impressions and higher ad prices. Meanwhile, the company has been making great strides in its AI models, and CEO Mark Zuckerberg has big ambitions.

Geoffrey Seiler has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Apple, Berkshire Hathaway, and Meta Platforms. The Motley Fool has a disclosure policy.