Investors' Favorite: Alphabet Inc. and AI Potential

Alphabet Inc. (NASDAQ:GOOG) on the Rise

Recently, one of the stocks attracting significant attention from investors is Alphabet Inc. (NASDAQ:GOOG). Stacy Rasgon, managing director and senior analyst at Bernstein U.S. semiconductor, shared his views on the AI bubble on CNBC, stating that he maintains a positive outlook on AI trading. Rasgon emphasized that companies are starting to receive returns on their investments and mentioned Alphabet as an example during the discussion:

“It is important not to forget the situation of those who started this business. Since 2021, another factor that has varied is that the majority of spending comes from companies that are the best-financed and most profitable in history. Additionally, these companies are intelligent, meaning they can see things we cannot. They are obtaining these returns alongside other business lines. Google is making profits in areas where it is generating returns.”

Alphabet is in a strong position to develop an artificial intelligence ecosystem around search and cloud services. Businesses worldwide are transitioning to Google Cloud. Alphabet’s cloud margin rose from 11% last year to 20.7% in the second quarter of this year. The Google Cloud manager stated earlier this year that the business has a wait time valued at $106 billion and noted that “it is growing faster than our revenue.” According to SimilarWeb data, while ChatGPT’s market share in AI chatbot traffic is declining, Gemini has rapidly grown its market share fourfold in the last six months.

Oakmark Equity and Income Fund stated the following about Alphabet Inc. (NASDAQ:GOOG) in their Q3 2025 investor letter:

“Alphabet Inc. (NASDAQ:GOOG) was the largest contributor during the quarter. The conglomerate’s stock price gained value following a positive decision in the Google Search antitrust case and second-quarter earnings that exceeded expectations across the board. Innovations in the Google Search experience are enhancing engagement and revenue benefits. Furthermore, the strong demand for AI deployments is accelerating Cloud growth. We believe that the totality of all the pieces Alphabet holds is undervalued and that the company's leadership in AI can provide further growth across its portfolio.”

While acknowledging GOOG’s potential as an investment, we believe that some AI stocks will yield higher profits and carry limited downside risk. If you are looking for a very cheap AI stock that is likely to benefit significantly from Trump tariffs and placements, be sure to check out our free report on the best short-term AI holdings.