"Alphabet is beginning to emerge as Wall Street's new favorite artificial intelligence (AI) growth stock. Artificial intelligence (AI) has certainly had an effect on the stock market over the last few years. In particular, a small collective known as the "Magnificent Seven" -- Nvidia, Apple, Microsoft, Amazon, Meta Platforms, Tesla, and Alphabet -- are pushing the frontiers across next-generation hardware and software."
"One company that is only just beginning to earn its position in the AI spotlight is Alphabet, whose shares blasted 65% higher last year. Perhaps one of the most telling signs that Wall Street is bracing for even more upside in Alphabet stock is the sheer number of high-profile institutional investors pouring into the stock. Let's dig into what separates Alphabet from its mega-cap peers."
"Alphabet generates revenue through a host of different products and services. The company's crown jewel is its advertising empire, which spans internet platforms Google and YouTube. The company also has a subscription component tied to its streaming service, as well as its consumer electronics division, Android. Lastly, Alphabet is beginning to make a splash in the world of cloud computing against rivals such as Amazon Web Services (AWS) and Microsoft Azure."
"The company's services segment -- which accounts for advertising, subscriptions, and devices -- is massively profitable. Through the first nine months of 2025, Google Services generated a 40% operating margin. Meanwhile, Google Cloud Platform (GCP) reported a 21% margin. On a trailing 12-month basis, Alphabet has been the most profitable AI business among the major hyperscalers. The company has slowly and methodically allocated its profits across many different areas in the AI value chain."
Alphabet has risen as a prominent AI-driven growth stock, with shares jumping 65% last year and elevated institutional investment. Revenue streams include Google and YouTube advertising, subscriptions, Android devices, and an expanding cloud business competing with AWS and Azure. Google Services produced a 40% operating margin through the first nine months of 2025, while Google Cloud reported a 21% margin. On a trailing twelve-month basis Alphabet led major hyperscalers in profitability. The company has allocated profits across multiple areas of the AI value chain and is transitioning from an internet-centric business toward broader AI and cloud leadership.
Read at The Motley Fool
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