I’m 35 and have quite a while to go until retirement. I really hope my investments will still hold value when I finally get there, but, you know, a lot can happen over the next few decades. I can’t be sure that all the companies I’m interested in now will still be in my portfolio then.
I’m fairly optimistic about some of my choices, particularly my top artificial intelligence (AI) stocks. For instance, Alphabet, which operates Google, has seen its stock price more than double in the last year. However, I’m not swayed by the recent buzz; it remains the leading stock in my retirement plan because I think it offers significant long-term potential in tech.
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I’ve been pondering something: Could AI actually create the first millionaire? There’s this lesser-known company called “Indispensable Monopoly” that many are watching because it supplies crucial tech for Nvidia and Intel. |
Alphabet has all the tools to win the AI race
When Alphabet’s stock dipped below $170 last year, it primarily stemmed from worries that Google Search might struggle against AI advancements. Surprisingly, Alphabet has managed to turn that potential threat into a significant advantage.
Google has rolled out AI summaries, and, last July, CEO Sundar Pichai noted that these features boast over 2 billion monthly users. It’s also worth mentioning that AI chatbots haven’t negatively impacted Google Search’s revenue, which increased by 19% year-over-year to $60.4 billion in Q1 2026.
Additionally, Google has upgraded its AI assistant, Gemini, to better compete with others like ChatGPT and Claude. Personally, I still might pick Claude, but it’s evident that Gemini has improved a lot in the past year—this is clear from its growing user base.
The Gemini app now has over 750 million active users each month. Moreover, in Q1, Alphabet announced its AI model processed over 16 billion tokens per minute through direct customer API usage—a remarkable 60% uptick from the previous quarter.
What sets Alphabet apart in this field is its holistic approach to AI. It controls everything from custom silicon and AI models to cloud services and distribution. This means it relies less on other AI companies, which, I think, gives it a stronger footing for future success.
A successful conglomerate at a reasonable price
While Google Search remains Alphabet’s main revenue generator, the company has various profitable endeavors. For example, in Q1 2026, Google Cloud’s earnings surged 63% year-over-year to reach $20 billion, with its backlog nearing $460 billion—almost double from the last quarter.
Alphabet also owns YouTube, which generated a robust $9.9 billion in ad revenue. What’s impressive is that users can sign up for premium services as well. This has helped Google accumulate 350 million paid subscriptions, according to Pichai. Personally, I heavily rely on YouTube Premium—it’s the one subscription I’d hesitate to eliminate.
Another notable venture is Waymo, Alphabet’s self-driving tech unit. In Q1, its robotaxis recorded over 500,000 rides weekly, and the division’s valuation skyrocketed to $126 billion following a $16 billion funding round.
With Alphabet’s stock rising significantly, a common question arises: “Is it still a smart buy?” The good news is that its valuation actually doesn’t seem excessive. The company is trading at a forward P/E of 27, compared to Nvidia’s 26. And its price-to-earnings growth (PEG) ratio is below 0.7, suggesting that it’s undervalued relative to its expected earnings growth.
What about risks?
Alphabet’s primary concern mirrors what investors feel about all major hyperscalers: enormous capital expenditures. Recently, Alphabet raised its capital spending forecast for 2026 from $180 billion to $190 billion.
This makes sense, especially for businesses building AI data centers. It’s estimated that the four major hyperscalers (Alphabet, Amazon, Meta Platforms, and Microsoft) will incur capital expenditures ranging between $600 billion and $700 billion in 2026, as noted by a recent study.
Even with a profitable track record, this level of spending could tax free cash flow (which stands at $64.4 billion for the next year). If the anticipated revenues from AI products and services don’t materialize, this could turn into a costly endeavor for the company.
Honestly, I’m not too concerned about Alphabet’s capital investments. The demand for computing resources is soaring, and AI data centers could usher in significant new revenue streams. For example, in April, Anthropic teamed up with Google, and recently, Broadcom pledged to invest $200 billion over five years in Google Cloud.
No investment is without its risks. But given Alphabet’s capacity for AI-driven growth and its successful businesses, I’m quite confident it will keep expanding over the next three decades.
Should you buy Alphabet stock now?
If you’re thinking about investing in Alphabet, here are a few things to weigh:
Motley Fool’s analysts have pinpointed what they believe are the best 10 stocks to buy at the moment… and surprisingly, Alphabet is not included. These stocks could deliver impressive returns in the coming years.
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