Alphabet shares have climbed more than 60% in the past year.
Alphabet has been quietly integrating artificial intelligence into its entire ecosystem.
The company’s profitability profile outperforms its peers, positioning Alphabet for long-term success.
10 Stocks We Like More Than Alphabet ›
Artificial intelligence (AI) has certainly had an effect on the stock market in recent years. In particular, a small collective known as the “Magnificent Seven” — Nvidia, Apple, Microsoft, Amazon, Meta platforms, adzeand Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) — push boundaries beyond state-of-the-art hardware and software.
One company that’s just starting to gain its footing in the AI spotlight is Alphabet, whose shares have soared 65% in the past year. Perhaps one of the most telling signs that Wall Street is gearing up for even more growth in Alphabet stock is the large number of high-profile institutional investors pouring into the stock.
Let’s dig into what separates Alphabet from its mega-cap peers and assess why now is a great time to buy the stock out of hand and prepare to hold on for the long haul.
Image source: Getty Images.
Alphabet generates revenue through a number of different products and services. The crown jewel of the company is its advertising empire, which spans the internet platforms Google and YouTube.
The company also has a subscription arm tied to its streaming service, as well as its consumer electronics division, Android. Finally, Alphabet is starting to make a splash in the world of cloud computing against rivals like Amazon Web Services (AWS) and Microsoft Azure.
The company’s services segment — which takes into account advertising, subscriptions and devices — is extremely profitable. In the first nine months of 2025, Google Services generated an operating margin of 40%. Meanwhile, Google Cloud Platform (GCP) reported a 21% margin.
GOOGL Net Income (TTM) data by YCharts.
On a trailing 12-month basis, Alphabet was the most profitable AI business among the major hyperscalers. The company has slowly and methodically allocated its profits to many different areas of the AI value chain. Let’s dig into how Alphabet is rapidly evolving from an Internet giant to a full-spectrum AI powerhouse.
One thing that makes Alphabet’s business model successful is its ability to vertically integrate its various operations. A vertically integrated company is one that controls many aspects of its own value and supply chain, as opposed to outsourcing its needs.
On the research side, Alphabet owns a lab called DeepMind that it uses to refine its AI model, Gemini.
At the computer level, Alphabet is implementing its own custom silicon solution — tensor processing units (TPUs). Alphabet collaborates with Broadcom for its TPU models. But the bigger point is that the company has now unlocked new ways to compete with current cloud infrastructure providers and migrate away from a full stack of Nvidia GPUs.
When it comes to infrastructure, Alphabet has invested heavily in capital expenditures (capex) over the past three years to build data centers around the globe. Its robust profitability profile enables the company to make these infrastructure investments on an ongoing basis.
Alphabet is starting to complement building data centers with energy-efficient infrastructure thanks to its $4.7 billion acquisition of Intersect. The move should give Alphabet flexibility around power capacity constraints as its AI workload expands. As such, the company does not have to rely so much on external energy suppliers.
By building such a diverse ecosystem, Alphabet is paving the way for cheaper training and inference costs as AI becomes more integrated across the enterprise. As a result, the company looks more than well-positioned to ride a wave of continued revenue acceleration, supported by further margin expansion.
Alphabet is not a company that revolves around a single product life cycle. What started as a search engine has masterfully evolved into a multi-faceted platform serving both consumers and businesses. Even a modest $1,000 investment in Alphabet’s IPO is now worth six figures — solidifying the long-term thesis.
GOOGL Total Return Price data by YCharts.
Today, business should be viewed through the lens of an AI ecosystem — a trend that could prove transformative in the coming decades.
With AI still in its infancy, Alphabet’s trajectory feels like the start of a decades-long arc of market-beating compound returns. In my eyes, Alphabet is a rare example of a stock to buy and hold forever.
Before buying shares in Alphabet, consider the following:
The Motley Fool Stock Advisor the analyst team has just identified what they think they are 10 best stocks for investors to buy now…and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $474,578!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,141,628!*
Now, it’s worth noting Stock advisor the total average return is 955% — a market-crushing outperformance compared to 196% for the S&P 500. Don’t miss the latest top 10 list, available with Stock advisorand join an investor community created by individual investors for individual investors.
See the 10 stocks »
*The Equity Advisor returns as of January 21, 2026.
Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long $395 January 2026 Microsoft calls and short $405 January 2026 Microsoft calls. The Motley Fool has a disclosure policy.
A Once-in-a-Decade Investment Opportunity: 1 Magnificent Artificial Intelligence (AI) Stock to Buy in 2026 and Hold Forever (Hint: It’s Not Nvidia) was originally published by The Motley Fool
