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Alphabet’s investments in artificial intelligence (AI) are driving strong momentum across the company.
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Despite the stock’s recent gains, its valuation remains reasonable and could outperform the market.
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10 stocks we like better than Alphabet ›
Actions of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) reached new highs in 2025 after strong financial results. The company is well-positioned to monetize its artificial intelligence (AI) investments in both enterprise and consumer markets, putting Google’s parent company in a particularly strong competitive position.
Despite the stock’s 67% year-to-date gain, it still trades at a reasonable valuation that can generate exceptional returns in 2026 and beyond.
Alphabet stock is rising sharply as revenue growth accelerates this year, with a 16% year-over-year increase in the third quarter. All of the company’s businesses, including search, subscriptions and cloud computing, are showing strong growth heading into the fourth quarter.
“We are now seeing AI drive real business outcomes across the enterprise,” said CEO Sundar Pichai. Revenue from products built with generative AI is growing rapidly, more than 200% year over year, and more than 70% of existing Google Cloud customers use AI tools.
Despite the recent evolution of the title, you have not missed the boat. The stock trades at 29 times 2026 earnings estimates, with analysts forecasting annualized earnings growth of 16% over the next few years. This remains a reasonable forward price-to-earnings multiple for an elite growth stock. The expected earnings growth, lower than Alphabet’s recent 35% year-over-year increase in the third quarter, is enough to double the stock by the end of the decade.
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