This AI Stock Has Everything I Look for in a Long-Term Winner. Here's My Case. | The Motley Fool

AI stocks show sustained strength despite a first-quarter decline, with the Nasdaq CTA Artificial Intelligence Index up nearly 40% for the year and 30% of gains occurring in the last 90 days. Alphabet is highlighted as a leading long-term AI opportunity because its core business is advertising, which funds its AI ambitions. Alphabet reported $109.89 billion in first-quarter revenue, up 22% year over year, with most revenue coming from advertising. Advertising accounted for 81.5% of Q1 2026 revenue, and Google Services generated $40.59 billion in operating income, implying a 45.2% operating margin. Google’s search and browser market shares provide a competitive moat.

"Not even a first-quarter swoon in AI stocks has derailed the market rally. The Nasdaq CTA Artificial Intelligence Index, which tracks the performance of companies involved with AI in the tech, industrial, medical, and other economic sectors, is up nearly 40% this year -- with 30% of that gain coming in the last 90 days."

"For everything that Alphabet is involved in -- YouTube, the Android operating system, Waymo robotaxis, and more -- Alphabet's roots are in advertising. And that's the engine that funds Alphabet's AI ambitions. Alphabet's revenue in the first quarter was $109.89 billion, up 22% from a year ago. And most of that money came directly from advertising."

"In all, Alphabet received 81.5% of its Q1 2026 revenue from advertising sources. In its financial statements, Alphabet includes revenue from Google subscriptions, platforms, and services in its Google Services segment, which is largely made up of advertising. The company reported operating income from that segment of $40.59 billion, which gives it an operating profit margin of 45.2% from Google Services."

"There are a few notable reasons for Google's advertising dominance. First, the company has the most widely used search engine and browser on the planet. Google Search had a 90% global market share in April, and its Chrome browser had a 68% market share. Those advantages alone give Google a wide competitive moat."

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