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Image source: The Motley Fool.<\/p>\n
Alphabet has all the tools to win the AI race<\/p>\n
When Alphabet stock sank below $170 last year, one of the main reasons was the concern that Google Search was vulnerable to AI. Instead, Alphabet has turned AI into a strength.<\/p>\n
Google incorporated AI Overviews, and last July, Google CEO Sundar Pichai reported that these AI Overviews had over 2 billion users per month. There’s been no indication that AI chatbots have damaged Google Search financially, either. Google Search revenue increased by 19% year over year to $60.4 billion in the first quarter of 2026.<\/p>\n
Google also improved its own AI assistant, Gemini, making it more competitive with ChatGPT and Claude. While I still personally prefer Claude, Gemini has clearly gotten much better over the last year, and that’s reflected in usage.<\/p>\n
The Gemini app has over 750 million monthly active users. In the first quarter, Alphabet reported that its first-party models processed more than 16 billion tokens per minute via direct API use from customers, a 60% increase from the previous quarter.<\/p>\n
What sets Alphabet apart from other top AI stocks<\/a> is that it controls its entire AI stack. It has its own custom silicon, AI models, cloud computing, and a distribution layer through its existing products. This full-stack approach makes Alphabet far less reliant on other AI companies and is why I feel most confident in its long-term success.<\/p>\n A successful conglomerate at a reasonable price<\/p>\n Google Search is Alphabet’s biggest revenue driver, but the company has several successful businesses. Google Cloud made $20 billion in sales in Q1 2026, a 63% year-over-year increase, and its backlog nearly doubled from the previous quarter to over $460 billion.<\/p>\n Today’s Change<\/p>\n (-1.19%) $-4.61<\/p>\n Current Price<\/p>\n $383.05<\/p>\n Key Data Points<\/p>\n Market Cap<\/p>\n $4.6T<\/p>\n Day’s Range<\/p>\n $381.78 – $388.75<\/p>\n 52wk Range<\/p>\n $162.00 – $408.61<\/p>\n Volume<\/p>\n 749.2K<\/p>\n Avg Vol<\/p>\n 28.6M<\/p>\n Gross Margin<\/p>\n 60.43%<\/p>\n Dividend Yield<\/p>\n 0.22%<\/p>\n It also owns YouTube, and while ad revenue from that is a solid $9.9 billion, another benefit is that it gets users to sign up for premium plans. Pichai said that YouTube is a key driver behind Google’s 350 million paid subscriptions, which doesn’t surprise me. YouTube Premium is easily the subscription service I use the most and the last one I’d want to cut.<\/p>\n Another business worth mentioning is Waymo, Alphabet’s autonomous driving technology company. It surpassed 500,000 paid robotaxi rides per week in the first quarter, and after a $16 billion investment round, it’s now valued at $126 billion.<\/p>\n Because Alphabet’s share price has increased so much, the question often arises: Is it still a good investment? The valuation actually isn’t particularly expensive, especially for one of the leading tech stocks<\/a>. Alphabet trades at 27 times forward earnings, comparable to Nvidia at 26 times forward earnings. Its trailing price\/earnings-to-growth (PEG) ratio is below 0.7, indicating it’s undervalued relative to its earnings growth.<\/p>\n What about the risks?<\/p>\n The biggest worry with Alphabet is the same one investors have about all the major hyperscalers: massive capital expenditures (capex). In its first-quarter earnings call, Alphabet raised capex guidance for 2026 to between $180 billion and $190 billion.<\/p>\n![\"Alphabet](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/05\/1779614650_590_.png\"\/)
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