Alphabet (GOOGL) Stock: AI Performance Drives 70% Rally To All-Time Highs

TLDR

• Alphabet stock has climbed almost 70% over the past year, reaching record highs near $300 per share
• Google Cloud revenue jumped 34% year-over-year in Q3, outpacing Microsoft Azure and Amazon AWS growth rates
• The company expanded pretax profit margins by seven percentage points while increasing capital spending from $13 billion to $24 billion
• Warren Buffett’s Berkshire Hathaway recently purchased $4.34 billion worth of Alphabet shares
• Gemini’s share of generative AI web traffic grew from 5.6% to 13.7% over the past 12 months

Alphabet stock closed at $299.66 on Friday, marking a new record high. The shares have gained almost 70% over the past 12 months.

Alphabet Inc., GOOGL

A year ago, the picture looked different. Judge Amit Mehta had declared Google a monopolist in August 2024. Investors worried about a potential breakup.

ChatGPT’s explosive growth raised questions about Google’s search business survival. The stock traded at just 20 times forward earnings. That was the lowest valuation among the Magnificent Seven stocks.

The concerns proved overblown. In September, proposed antitrust penalties came in relatively mild. Google demonstrated its ability to adapt to AI competition with four consecutive earnings beats.

Shares now trade at 26 times earnings. About half the gain came from multiple expansion. The other half came from earnings growth.

Berkshire Hathaway added $4.34 billion in Alphabet shares to its portfolio. The stock has become the best-performing Magnificent Seven name in 2025, up 59% year-to-date.

Financial Performance Shines

Alphabet grew third-quarter pretax profit by 39%. The company expanded pretax profit margins by seven percentage points. This happened even as capital spending jumped from $13 billion to $24 billion year-over-year.

The performance contrasts with Meta Platforms. Meta’s pretax profit margins fell two percentage points as capital spending more than doubled to $19 billion.

Google Search & Other revenue grew 15% year-over-year. The segment still accounts for roughly 55% of total revenue. The doomsday predictions about search’s demise haven’t materialized.

Wall Street expects 2025 earnings north of $10 per share. That’s up from $9 expected a year ago. Analysts project 2026 earnings could reach $12 to $13 per share from the current $11 estimate.

Cloud Business Accelerates

Google Cloud Platform holds 13% of the global cloud market. Amazon’s AWS leads with 29%, followed by Microsoft Azure at 20%.

Google Cloud revenue jumped 34% year-over-year in Q3. That growth rate exceeded Microsoft’s 33% and Amazon’s 20%.

Wall Street expects Google Cloud to generate $75 billion in 2026 revenue. That’s up from about $57 billion in 2025.

The launch of Gemini 3 on November 18 showcased Google’s competitive position. The new model includes Deep Think for complex reasoning tasks. It offers generative user interfaces and improved coding tools.

Gemini now has 650 million monthly active users. ChatGPT reports 800 million weekly active users. Gemini’s share of generative AI web traffic reached 13.7% from 5.6% twelve months earlier.

Evercore analyst Mark Mahaney maintains a $325 price target. He writes that GOOGL is no longer a classic undervalued stock, but the fundamentals remain impressive.

The 14-day RSI sits in overbought territory. The average analyst price target stands at $321.94, implying 7% upside from current levels.

The company spent $24 billion on capital expenditures in Q3. CEO Sundar Pichai noted that Waymo’s 2026 is “shaping up to be an exciting year.”

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