Alphabet's AI Growth Surges, Outpacing Nvidia
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy GOOGL?
Source: Fool
- Outstanding Financial Performance: Alphabet's Q4 2025 revenue rose 18% year-over-year to $113.8 billion, with Google search and other revenues increasing 17% to $63.1 billion, showcasing the company's strong performance across diversified businesses and enhancing market confidence.
- Robust Search Business: In the AI era, Google search usage hit an all-time high, with daily AI Mode queries per user doubling and query lengths tripling compared to traditional searches, indicating that AI is significantly boosting search operations and enhancing user engagement.
- Accelerating Cloud Revenue: Google Cloud's revenue surged 48% year-over-year in Q4 2025 to $17.7 billion, while operating income jumped from $3.6 billion to $5.3 billion, reflecting strong market demand and existing customers exceeding their initial commitments by over 30%.
- Capital Expenditure Risks: While Alphabet's P/E ratio stands at about 29 times, more attractive than Nvidia's 37 times, the projected capital expenditures for 2026 are expected to reach $175 billion to $185 billion, with rising depreciation potentially impacting future profitability, necessitating cautious investor sentiment.
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Analyst Views on GOOGL
Wall Street analysts forecast GOOGL stock price to rise
33 Analyst Rating
26 Buy
7 Hold
0 Sell
Strong Buy
Current: 318.490
Low
305.00
Averages
374.25
High
400.00
Current: 318.490
Low
305.00
Averages
374.25
High
400.00
About GOOGL
Alphabet Inc. is a holding company. The Company's segments include Google Services, Google Cloud, and Other Bets. The Google Services segment includes products and services such as ads, Android, Chrome, devices, Google Maps, Google Play, Search, and YouTube. The Google Cloud segment includes infrastructure and platform services, collaboration tools, and other services for enterprise customers. Its Other Bets segment is engaged in the sale of healthcare-related services and Internet services. Its Google Cloud provides enterprise-ready cloud services, including Google Cloud Platform and Google Workspace. Google Cloud Platform provides access to solutions such as artificial intelligence (AI) offerings, including its AI infrastructure, Vertex AI platform, and Gemini for Google Cloud; cybersecurity, and data and analytics. Google Workspace includes cloud-based communication and collaboration tools for enterprises, such as Calendar, Gmail, Docs, Drive, and Meet.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI Full-Stack Advantage: As the only company with comprehensive AI capabilities, Alphabet's strong presence across chips, cloud computing, and research positions it as a leader in the AI market, enhancing investor confidence in its future profitability.
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- Alphabet's Strategic Investment: Alphabet invested $900 million in SpaceX in 2015, and its stake is now valued at over $100 billion; if SpaceX goes public, this could rise to $120 billion, enhancing Alphabet's market position in advertising, cloud computing, and autonomous driving.
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- Margin Expansion: The company's gross margin rose to 50.9%, up 21.1 percentage points from Q1, reflecting its ability to successfully raise prices in the context of storage device shortages, thereby significantly enhancing its financial performance.
- Market Position: As hyperscale data centers expand, Sandisk has positioned itself as a critical supplier of storage devices, benefiting in the short term despite rising competition from companies like Samsung and Micron, which are ramping up production capacity.
- Investment Strategy: Despite Sandisk's current success, analysts prefer investing in vertically integrated AI companies like Alphabet and Microsoft, which possess broader technological advantages and greater sustainability in the evolving market landscape.
See More
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- Surge in Storage Demand: Sandisk's stock has surged over 2200% in the past year, primarily driven by the skyrocketing demand for high-capacity storage devices essential for AI models, highlighting the company's pivotal role in the data center market.
- Significant Profitability Increase: In Q2 of fiscal 2026, Sandisk reported a net income of $803 million, a 672% year-over-year increase, with gross margins rising to 50.9%, indicating the company's successful price hikes amid hardware shortages.
- Market Competition Pressure: Although Sandisk is currently well-positioned, the ramp-up in production capabilities by companies like Samsung and Micron will alleviate the storage device shortage, potentially forcing Sandisk to lower prices to remain competitive.
- Long-term Investment Confidence: In contrast, Alphabet and Microsoft are seen as more attractive long-term investments due to their full-stack AI solutions and robust cloud platforms, allowing them to benefit from multiple phases of the AI pipeline, while Sandisk relies solely on sales volume growth.
See More
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- Significant Growth in RPO: As of Q3 FY2026, Oracle's remaining performance obligations (RPO) reached approximately $553 billion, a staggering 325% year-over-year increase, providing strong multi-year revenue visibility despite the associated risks of high debt levels.
- Surge in Cloud Infrastructure Revenue: Oracle's cloud infrastructure (OCI) revenue soared by 84% year-over-year, while total cloud revenues rose 44% in Q3, demonstrating robust growth in its multi-cloud database business as enterprises increasingly adopt Oracle databases across major platforms.
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