Artificial intelligence (AI) has created huge winners across the tech industry, with some companies posting triple-digit returns over the past year. Among them is the optical and photonic components manufacturer Lumentum Holdings (NASDAQ: LITE), which has surged 267% year-to-date.<\/p>\n
There’s no doubt the company’s growth has been impressive, and it’s possible that its stock could continue to be a winner for investors. But I also think there’s a case to be made for betting on the global tech leader Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), which already has substantial cash reserves, diversified revenue streams, and is massively profitable.<\/p>\n
Here’s what’s going well for Lumentum, but why Alphabet still looks like the better AI stock<\/a>.<\/p>\n I get the appeal of Lumentum for investors. The company has carved out a unique niche in the AI infrastructure space with products that allow for ultra-fast data transmission between servers and computer clusters. As data center spending<\/a> has soared over the past few years, Lumentum has certainly benefited.<\/p>\n The company recently reported its first-quarter results with revenue jumping 58% to nearly $534 million, and non-GAAP net income soared from $0.18 per share in the year-ago quarter to $1.10, beating Wall Street’s consensus estimate of $1.03.<\/p>\n Lumentum’s management also issued strong guidance for the second quarter, with sales expected to be $650 million, at the midpoint of guidance, representing a 62% increase from the year-ago quarter.<\/p>\n Over the next five years, Nvidia CEO Jensen Huang believes that big tech companies will spend between $3 trillion to $4 trillion expanding their data centers. If that \u00a0figure is even remotely accurate, this spending could continue to be a significant tailwind for Lumentum’s business.<\/p>\n Yet for all of Lumentum’s impressive growth, Alphabet offers investors something far more valuable: diversified AI exposure backed by proven profit generation.<\/p>\n Consider that in the most recent quarter, Alphabet generated $102 billion in sales and had $2.87 in earnings per share. All that growth came from its diverse businesses, including Google Search, software subscriptions, mobile devices, platforms, YouTube, and Google Cloud.<\/p>\n Story Continues <\/p>\n Alphabet is also vying for the top spot in the AI chatbot race with OpenAI, and its Gemini 3 chatbot is giving ChatGPT a run for its money. Gemini 3 has 650 million weekly users, and management has said that AI Mode on Search now has 2 billion monthly users. The company has also integrated its AI services into its Google Cloud, giving customers even more reason to sign up for its cloud services.<\/p>\n The point here is that Alphabet has diversified opportunities in AI and is generating massive revenue and earnings. Add to all this the fact that the company has more than $24 billion in free cash flow to invest in new AI businesses for years to come, and it appears Alphabet has the long-term advantage over Lumentum.<\/p>\n And finally, Alphabet’s stock is far cheaper than Lumentum’s. Alphabet’s price-to-earnings ratio is just 31 — far below the tech sector’s average of 46 — compared to Lumentum’s P\/E ratio of 203. That means investors are paying a premium for Lumentum right now, while Alphabet looks like a great deal both compared to Lumentum and the broader tech sector.<\/p>\n Before you buy stock in Alphabet, consider this:<\/p>\n The Motley Fool Stock Advisor analyst team just identified what they believe are the\u00a010 best stocks<\/a> for investors to buy now\u2026 and Alphabet wasn\u2019t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.<\/p>\n Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you\u2019d have $521,550!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you\u2019d have $1,133,904!*<\/p>\n Now, it\u2019s worth noting\u00a0Stock Advisor\u2019s total average return is 981% \u2014 a market-crushing outperformance compared to 194% for the S&P 500.\u00a0Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built by individual investors for individual investors.<\/p>\n See the 10 stocks \u00bb<\/a><\/p>\n *Stock Advisor returns as of December 8, 2025<\/p>\n Chris Neiger<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends Lumentum. The Motley Fool has a disclosure policy<\/a>.<\/p>\n Image source: Getty Images. <\/p>\n