Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) was slow out of the gate when it comes to artificial intelligence. Over the past year, though, the tech giant has roared back, staking its claim to be a leader in AI development. That has driven the stock to new heights, briefly making the company the second-largest in the world by market capitalization behind only Nvidia (NASDAQ: NVDA).
Yet as longtime investors know, history is filled with companies that briefly flared to brilliance only to burn up and fall back to Earth. For Alphabet CEO Sundar Pichai to avoid the same fate, he’ll have to lead the company forward in directions that will open up even more opportunities for growth. In this third and final article on Alphabet for the Voyager Portfolio, you’ll see more about Pichai’s plans for AI dominance and whether the tech giant can get the job done.
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Alphabet’s February conference call provided an excellent summary of where Pichai is taking the company. From a big-picture standpoint, Alphabet’s various businesses are looking strong. Core search revenue was up 17% year over year, and YouTube saw revenue for the year climb above the $60 billion mark, combining both ad sales and subscription revenue. Between YouTube Premium, Google One, and other consumer services, Alphabet boasted over 325 million paid subscriptions, which contribute valuable recurring revenue for the company.
As you’d expect, Pichai played up all of Alphabet’s AI accomplishments. Over 750 million monthly active users are taking advantage of its Gemini app. Alphabet has sold more than 8 million paid seats for the enterprise version of Gemini, despite its having been available for just four months. And with the December launch of Gemini 3, user engagement metrics have been climbing rapidly.
In particular, Pichai sees three key aspects of making the most of AI. First, the company has worked hard to bolster its AI infrastructure, which includes not only GPUs from Nvidia but also its own proprietary tensor processing units that are designed to optimize performance for AI-specific workloads. Alphabet is taking pride from not only boosting capacity but also becoming more efficient, lower serving-unit costs for Gemini by more than three-quarters during 2025 alone.
Second, research into AI models and tooling has taken off. Gemini 3 Pro is the most visible manifestation of Alphabet’s work, with triple the token use from its previous Gemini 2.5 Pro offering. More than 1.5 million weekly active users are on the Antigravity development platform after just two months. Alphabet boasts leadership in areas from text, vision, and image-to-video processing.
Lastly, Alphabet knows that AI tools aren’t useful if they aren’t accessible. The company has therefore launched AI-powered capabilities across its extensive product spectrum, from AI Mode search capability to AI-enhanced Gmail and Chrome functionality. A new open standard for agentic AI commerce could revolutionize shopping in time, and incorporating AI into its Android and Pixel devices has been a top priority that is close to fruition. YouTube creation is benefiting from AI tools, and advances in technology are supporting the Waymo self-driving vehicle business as well.
The next question Alphabet will have to answer is whether AI strength will bring more growth to its broader cloud computing services segment. Pichai said that new customers are coming in faster. Cloud infrastructure can involve high switching costs that will make it hard for Alphabet to woo customers using rival services, but if it can do so, those costs will make it likelier for new clients to stick around.
With a high allocation within major index ETFs and separate positions elsewhere among my holdings, Alphabet doesn’t warrant a place in the Voyager Portfolio. However, the company has done a great job of proving naysayers wrong in past years. If interest in AI keeps accelerating, Alphabet is likely to be one of the biggest winners from the ongoing trend.
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Dan Caplinger has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
