TCW Funds, an investment management company, released its Q4 2025 investor letter “TCW Relative Value Large Cap Fund.” A copy of the letter can be downloaded here. Stocks ended the year on a positive note, with the S&P 500’s total return (USD) rising 2.65% and reaching a notable 17.9% in 2025. The AI sector continued to thrive following Trump’s tariff announcements. While there are worrying indicators similar to the dot-com bubble, the underlying companies appear to be defying the odds with technological advancements, strong financials, and reasonable valuations. The Fund (comparto) returned 4.29% for the quarter, compared to 3.81% for the Russell 1000 Value Index. Year to date, the Fund has returned 19.32% compared to 15.91% for the Index. Also, check out the Fund’s top five holdings to learn your best picks in 2025.
In its Q4 2025 investor letter, TCW Relative Value Large Cap Fund highlighted stocks like Alphabet Inc. (NASDAQ:GOOG). Alphabet Inc. (NASDAQ:GOOG), Google’s parent company, offers several platforms and services, including online search and advertising, cloud solutions, and artificial intelligence, and contributed significantly to the fund’s performance during the quarter. On April 6, 2026, shares of Alphabet Inc. (NASDAQ:GOOG) closed at $297.66 per share. Alphabet Inc. (NASDAQ:GOOG)’s monthly performance was -3.02% and its stock gained 103.07% in the past 52 weeks. Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $3.6 trillion.
TCW Relative Value Large Cap Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its Q4 2025 investor letter:
“The stocks with the best performance in the quarter were Alphabet Inc. (NASDAQ:GOOG), Intel (INTC; 2.69%**) and Merck & Co (MRK; 2.70%**). Alphabet shares rose throughout October and November. In late October, the company reported strong third-quarter earnings with gains in Search, YouTube and cloud. In particular, the cloud backlog is the highlight: it now stands at $155 billion, a sequential increase of 46%. The stock rose again in November after the company unveiled semiconductors that some analysts believe could rival NVIDIA’s†, as evidenced by news that Meta Platforms (META; 2.83%**) was in talks to use them. At the same time, Google released Gemini 3, which immediately received praise from analysts for its reasoning and coding capabilities.
Investment in Alphabet was eliminated in the fourth quarter in an orderly manner after it had appreciated to the point that the stock did not meet any of the five valuation characteristics. GOOG entered 2025 as a perceived underdog in AI, with investors fearing its search business was at risk of being disrupted by generative AI queries, where the new OpenAI had a seemingly large lead. This perception changed throughout the year due to a few key catalysts. As for its new product/market catalyst, Google had two lauded launches with its Nano Banana imaging model and its Gemini 3 general-purpose LLM, both of which garnered millions of users and helped close the gap with OpenAI. Financially, search revenue growth remained stable and its cloud business accelerated, driven by TPUs, Alphabet’s proprietary AI chips that reduce model training and inference costs. Finally, on the regulatory side, the GOOG search antitrust case trial was settled without any structural remedy in the worst case scenario, eliminating a surplus for the stock. “As a result, the stock outperformed and, as a result, re-rated higher and is now earning an above-market ‘AI Winner’ multiple.”
