If you’re searching for a top artificial intelligence (AI) stock to own in the coming year and beyond, you don’t have to look far. Chances are, you interact with this company’s products every day. That’s a key reason why Alphabet ( GOOGL 0.82%) ( GOOG 0.86%) stands out as a leading AI investment for both the near and long term.
A frontrunner in search and AI
While Alphabet has grown far beyond just Google search, that remains its core and most profitable segment, and it’s likely to stay that way for years to come. Regardless of whether users search via traditional methods or AI chatbots, Alphabet has built a formidable competitive edge in this space.
Alphabet’s dominance is rooted in its distribution power. It owns Chrome, the world’s most popular browser, and Android, the leading mobile operating system—each commanding over 70% of their respective markets. This makes Google the default search engine for most users. Additionally, a revenue-sharing agreement with Apple ensures Google is the default search on Apple devices, extending its reach to nearly everyone outside of China, where Google search is unavailable.
Alphabet is also enhancing its search offerings with its advanced Gemini large language models to fuel further expansion. It has launched multimodal AI search tools like Lens and Circle to Search on mobile devices, driving up search activity. The company has also added AI Overviews to search results, making searches more effective. Now, with the introduction of AI Mode, users can seamlessly toggle between classic search and an AI chatbot without leaving the app or site. The standalone Gemini app is also gaining popularity, especially for its "Nano Banana" image editing feature, which will soon be integrated into more Alphabet products.
All of this is backed by a data advantage that no rival can match. Alphabet benefits from decades of user behavior data, vast video content via YouTube, and unparalleled search scale that powers its Gemini models. Its massive, well-established advertising network supports everything from global to hyperlocal campaigns, something new competitors simply can’t replicate. This is why Alphabet’s competitive moat remains so wide.
Expanding beyond search
Alphabet’s fastest-growing segment is cloud computing. In the most recent quarter, Google Cloud’s revenue surged 32% to $13.6 billion, and operating profit more than doubled to $2.8 billion. The surge in demand prompted Alphabet to boost its capital spending plan for the year from $75 billion to $85 billion to expand its data center footprint.
Alphabet’s edge in cloud services comes from its fully integrated approach. It’s the only major cloud provider with its own leading AI model, proprietary AI chips, and top-tier software. It also operates its own fiber network, ensuring fast speeds and minimal delays. These advantages help keep costs down. The company is also set to strengthen its position with the planned acquisition of Wiz, which will add a premier cloud cybersecurity platform to its offerings.
In addition to search and cloud, Alphabet is investing in new ventures like its Waymo autonomous taxi service and its quantum computing arm. Waymo’s robotaxis are already running in several U.S. cities and expanding quickly. If Alphabet can lower costs and scale this business, it could become a major growth engine. Meanwhile, its Willow quantum chip is making significant strides in reducing error rates—a key challenge for quantum computing. Together, these initiatives provide Alphabet with substantial future growth opportunities.
An undervalued opportunity
Despite all these strengths, Alphabet’s shares are trading at less than 24 times projected 2026 earnings, which is cheaper than most other large-cap AI companies.
With its dominant businesses, promising new ventures, and appealing valuation, Alphabet is exceptionally well-positioned to outperform in 2026. This is a stock worth considering for both the upcoming year and the long run.
