Two Tech Titans Leading the Bull Market: Why Institutional Money Is Betting on AI-Driven Growth

As the Nasdaq Composite settles into a robust bull market with a historical average annual return of 31%, institutional investors are making calculated bets on companies positioned at the intersection of technology dominance and artificial intelligence innovation. Meta Platforms and Alphabet are emerging as key holdings among the world’s most prominent investment firms—a signal worth examining beyond the surface.

The Bull Market Backdrop

The Nasdaq Composite entered a new bull market phase earlier this year, following six other major bull runs since 1990. Historical data suggests meaningful upside potential extending into 2026 and beyond. Yet not all technology stocks are positioned equally. The concentration of institutional capital flowing toward Meta and Alphabet reveals where sophisticated investors see the greatest AI-driven value creation.

Major hedge funds have significantly increased positions in both companies during the third quarter. Duquesne Family Office acquired 76,100 shares of Meta and 102,200 shares of Alphabet, representing roughly 2% of portfolio weight. Millennium Management purchased 793,500 Meta shares and 2.2 million Alphabet shares, making them the eighth and fifth largest holdings respectively. Citadel Advisors deployed 1.4 million Meta shares as its fourth-largest position, while adding 2.5 million Alphabet shares to its portfolio. Coatue Management acquired 355,000 Meta shares and 7.3 million Alphabet shares, positioning the latter as its third-largest holding.

This synchronized institutional accumulation suggests a coordinated thesis: both companies possess structural advantages in converting AI investments into shareholder returns.

Meta’s AI Transformation in Content and Commerce

Meta Platforms controls three of the four most-used social networks globally, granting unparalleled insight into consumer behavior and preferences. This data advantage, combined with substantial AI infrastructure investments, is reshaping user engagement metrics.

The company designed proprietary AI chips and large language models specifically optimized for content recommendation systems. Third-quarter earnings reflected tangible results: Facebook engagement climbed 5%, Threads usage jumped 10%, and Instagram video interactions surged 30%. These engagement gains translate directly to advertising effectiveness.

CEO Mark Zuckerberg attributed advertising strength partly to “improvements in our AI ranking systems.” Meta’s ad tech business, already the second-largest globally by revenue, is leveraging machine learning to refine targeting precision and content relevance.

Financial momentum supports the thesis:

• Q3 revenue reached $51 billion, up 26% year-over-year
• GAAP net income (adjusted for one-time tax items) hit $7.25 per diluted share, a 20% increase
• Wall Street projects 17% annual earnings growth over the next three years
• The valuation of 30 times earnings appears reasonable given forecasts for 14% annual ad tech spending growth through 2030

The stock recently retreated 15% from record highs after management signaled elevated capital expenditure plans for 2026—a signal the company is doubling down on AI infrastructure to sustain competitive moats. This pullback creates entry points for patient investors.

Alphabet: Defending Search While Building Cloud Leadership

Alphabet operates the world’s largest ad tech platform through Google Search and YouTube, generating unmatched user engagement and data sourcing advantages. While generative AI tools pose theoretical threats to search advertising, Alphabet has adapted through features like AI Overviews and AI Mode.

The company launched new advertising products like AI Max for search campaigns, which automate ad creation, copywriting customization, and landing page optimization. Gartner research projects 50% organic search traffic decline by 2028, yet Alphabet should retain digital advertising dominance through superior AI-driven personalization.

Beyond search, Alphabet’s Google Cloud stands as the third-largest public cloud provider by infrastructure and platform spending. The division gained 2 percentage points of market share over two years, primarily driven by AI capabilities. Gartner ranked Google Cloud the most capable platform for AI application development, while Forrester Research highlighted its large language model leadership.

CFO Anat Ashkenazi highlighted robust demand for AI infrastructure, particularly custom chips and Gemini models, during the latest earnings call.

Financial backdrop shows accelerating momentum:

• Q3 revenue climbed 16% to $102 billion, accelerating from 15% growth in the prior year
• GAAP earnings jumped 35% to $2.87 per diluted share, beating consensus expectations
• Wall Street projects 16% annual earnings growth over three years
• The valuation of 32 times earnings reflects recent stock appreciation of 70% year-to-date

While Alphabet shares have appreciated significantly, the projected earnings growth rate supports current valuation levels. Building a starter position remains tactically sound.

The Bull Market Framework: Why AI Dominance Matters

Both companies share critical characteristics that institutional investors prioritize during bull markets:

Durable competitive advantages: Meta’s social data and Alphabet’s search data create moats that generative AI tools cannot easily circumvent. Both companies are weaponizing AI to strengthen existing advantages rather than starting from scratch.

Financial leverage: AI investments drive engagement and advertising efficiency—metrics that convert directly to earnings growth. The projected earnings expansion (16-17% annually) outpaces broader market growth expectations.

Valuation resilience: At 30-32x earnings with double-digit earnings growth rates, both stocks trade at reasonable bull market valuations. The historical Nasdaq average suggests significantly higher absolute returns over the coming bull cycle.

Infrastructure positioning: Both companies control essential AI infrastructure—Meta through custom chips and models, Alphabet through cloud computing and foundational AI research. This infrastructure layer creates recurring revenue streams and lock-in effects.

The Institutional Signal

When hedge funds with billions under management simultaneously accumulate positions in the same stocks, they’re typically signaling one of two scenarios: either a fundamental thesis about earnings power or a valuation opportunity relative to intrinsic value. In this case, both conditions appear aligned.

The bull market extending toward 2026 provides a multi-year runway for these AI-driven earnings to materialize. For investors seeking exposure to technology leadership and artificial intelligence infrastructure, these institutional positions warrant serious consideration before more capital pushes valuations higher.