Alphabet Stock: An AI-fueled jump in a shifting tech landscape

Alphabet Inc. (NASDAQ: GOOG, GOOGL) has delivered a strong performance in 2025, achieving broad-based growth across all business segments and dispelling concerns that AI chatbots such as OpenAI might erode its market position. The stock rallied, with the value more than doubling since mid-year and moving closer to $4 trillion in market cap. Investor confidence stems from the tech giant’s full-stack AI strategy and its leadership in multimodal language models, anchored by seamless Gemini integration across platforms.

There has been a steady growth in Gemini App monthly active users, hitting 650 million in the most recent quarter. Following recent gains, Alphabet’s valuation remains compelling as one of the most attractively priced large-cap tech stocks. AI-led growth, robust cash generation, and diversified business lines underpin this strength. Beyond operating one of the most advanced AI platforms, the company is also building state-of-the-art custom chips, opening new revenue streams that can drive incremental shareholder returns.

Broad-based Growth

In the third quarter of fiscal 2025, Alphabet’s revenue increased 16%, or 15% in constant currency, year-over-year to $102.3 billion, aided by double-digit growth across key operating segments, including Google Search, YouTube, and Google Cloud. Net income climbed 33% to $35 billion, and earnings per share increased 35% to $2.87 compared to last year. Revenues from the cloud business rose 28%. Revenue topped expectations, continuing the long-term trend of outperformance. In the past three years, quarterly earnings have consistently beaten analysts’ estimates.

“As we scale, we are diversifying revenue. Today, 13 product lines are each at an annual run rate over $1 billion, and we are improving operating margin with highly differentiated products built with our own technology. This deep product differentiation starts with our AI infrastructure. We have a decade of experience building AI Accelerators and today offer the widest array of chips. This leadership is winning customers like HCA Healthcare, LG AI Research, and Macquarie Bank, and it’s why nine of the top ten AI labs choose Google Cloud,” Alphabet’s CEO Sunder Pichai said in the Q3 2025 earnings call.

Futuristic Moves

Alphabet solidified its lead in the generative AI landscape last month with the debut of Gemini 3, a frontier multimodal model that natively processes and generates text, high-fidelity images, audio, and video. More recently, the company announced an agreement to acquire Intersect, a provider of data center and energy infrastructure solutions, for $4.75 billion.  The deal is expected to enable more data center and generation capacity to come online, while accelerating energy development and innovation.

Alphabet’s custom AI chips give it a significant edge over other leading AI players, as most of the company’s internal workloads run on those Tensor Processing Units. They are cost-effective and energy-efficient compared to Nvidia’s general-purpose GPUs, which Alphabet’s competitors mostly rely on. Gemini, once considered a laggard among AI models, has emerged as a preferred option, mainly due to its custom AI chip and multimodel capabilities.

Alphabet’s stock has grown more than 85% in the past six months, and is currently trading sharply above its 12-month average value of $209.25.