Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.

Alphabet looks like a company with very strong operational efficiency, but it is no longer cheap on several valuation multiples. Its P/E is around the industry median and noticeably more stable than at previous points in the series, which suggests a normalization of valuation after more volatile periods. At the same time, P/S, P/B, and especially P/FCF remain significantly above industry benchmarks, so the market is already pricing in high business quality and strong cash flow. This limits the potential for further re-rating and makes the current valuation sensitive to any slowdown in growth. On the other hand, the company’s profitability is outstanding: ROE, ROA, ROI, and return on tangible equity are significantly above the median and improving year by year, while operating and net margins remain at a very high level. Revenue, gross profit, EBITDA, and net income are also growing, confirming business scaling without a noticeable loss of efficiency. Liquidity looks comfortable: the current ratio and quick ratio are above one with room to spare, and the cash position is very strong, which reduces financial risk. At the same time, debt is increasing, and long-term debt is already noticeably above previous levels, so the balance sheet cannot be considered completely risk-free, although debt/equity remains low. The dividend yield is minimal and has little impact on the investment case, as Alphabet remains a growth-and-quality story rather than a yield story. Overall, the fundamentals support a premium to the market, but the high valuation on sales and free cash flow does not allow for an aggressive increase in the target price. For an investor, this is more a story of a high-quality leader with sustainable growth and strong margins than an undervalued stock with significant upside from multiples. Therefore, a forecast revision is appropriate only moderately and slightly upward.

Alphabet Inc.

Сильный индекс, значительно упал. Оптимистичный взгляд на свои позиции резко сменился на неуверенность.

Strong index, significantly down. An optimistic view of his position suddenly changed to uncertainty.

Слабый индекс, значительно вырос. Рынок не поддерживает быков.

Weak index, significantly up. The market does not support the bulls.

Средний индекс, незначительно вырос. Отток средств из лонгов снизился, но остается значительным.

Medium index, slightly up. The outflow of funds from longs has decreased, but remains significant.

Alphabet shows strong revenue and profit growth, high profitability and liquidity, but trades at a premium on P/S and P/FCF, which limits upside.

Key Points
After a sweeping rally, the market’s pricing these tickers differently based on each company’s potential.
But these valuations aren’t necessarily correct reflections of these names’ risk and reward.
One of these Magnificent Seven companies is better protected from unpredictable headwinds.
As the old adage goes, you get what you pay for. In other words, if you want quality, you can expect to pay a premium for it. The idea applies within the world of investing as well.
Still, knowing that stocks' prices and valuations constantly ebb and flow -- sometimes to extremes -- it's not wrong to think about the price you're paying to plug into a particular company's performance.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
This premise presents a potential opportunity to investors interested in the market's biggest and highest-profile names. Although they're all so-called "Magnificent Seven" stocks, one of these names is measurably cheaper than all the others right now. While not a reason in and of itself to step in, this valuation bolsters the existing bullish case.
This Mag-7 bargain? Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), priced at just over 16 times this year's analyst-projected per-share earnings of $20.59.
The numbers
If you've been keeping tabs on Google's parent company and its recent quarter, you already know something important. Its earnings projection includes a $6.26-per-share second-quarter accounting benefit linked to the growth of the company's investments in SpaceX and Anthropic. Without that one-time bump, Alphabet's only on track to earn $14.33 per share this year, translating into a price-to-earnings ratio of a little more than 23.
That's not exactly cheap, but it's not outrageous either. It's less than Nvidia's 2026 comparison of 24, as well as Microsoft's P/E ratio of 27 based on this year's expected earnings of $19.76 per share. Indeed, the only Magnificent Seven name that's even sort of close is Amazon. However, like Alphabet, it too reported a big gain from its stake in Anthropic during Q2 of this year. Indeed, $53.4 billion of its Q2 $62.6 billion in net income came from its Anthropic holding. Strip that out, and Amazon stock is valued at roughly 27 times 2026's anticipated profit.
There's more than one way to value a stock, of course. Arguably the more meaningful way is based on that company's future earnings. That's where things start changing a bit here.
Company
Trailing Price-to-Earnings Ratio
Forward Price-to-Earnings Ratio
Nvidia
28.1
14.1
Apple
39.4
35.9
Alphabet
16.7*
21.7
Microsoft
29.7
22.7
Amazon
21.1*
24.6
Tesla
359.1
170.3
Data source: Finviz. Forward price/earnings ratios reflect 2027's per-share earnings projections. *Reflects significant one-time accounting benefits.
Although GOOGL shares are only slightly more expensive on a forward-looking basis than Facebook parent Meta's stock price of around 21, Nvidia is technically trouncing both by this measure at only 14 times its expected 2027 earnings of $15.80 per share. It's an outlook that requires a near-doubling of this year's likely profits, on year-over-year revenue growth of nearly 70%. Nvidia might be able to do it, but there's no room for error. Even the slightest balk in overall capital spending on AI hardware could pull the rug out from underneath this name.
In other words, don't be too trusting of what superficially looks like a bargain price. Most investors aren't, in fact. That's why NVDA shares are valued so cheaply compared to next year's predicted profits.
In the right business(es) in the right way at the right time
Those are the comparative numbers, and they matter. Just don't become so valuation-focused that you lose sight of the fact that numbers aren't everything. As an investor, you're also buying into parts of a business that you can't quantify.
That's the crux of the reason to consider stepping into a stake in Alphabet over any other Mag-7 name right now, regardless of any of their valuations. It's arguably better positioned than any of these other companies to stand up to whatever headwinds might soon start blowing.
Its revenue mix has a great deal to do with this resiliency. While Google Cloud's Q2 revenue soared 82% to triple this arm's operating income, the company's breadwinning business remains search-based advertising, which is a reliable cash cow regardless of the economy's condition. For perspective, Google and its related profit centers still contribute more than four times what cloud computing does to Alphabet's bottom line.
To the extent that AI is a key driver of future growth, Alphabet's got a competitive edge. That's the fact that it's in a better position to sell artificial intelligence as a recurring service than most of its top rivals are.
Most of the major names in the business offer such options one way or another. However, with processors, data centers, and software -- the full "stack" -- plus existing relationships with business customers, Google is more likely to remain a provider even if competitors lose customers in a slowdown of the AI industry's current growth.
Google Cloud's total backlog of future revenue that's been contracted but not yet consumed or booked now stands at $514 billion. That's 20 times last quarter's top line for this arm alone, none of which will necessarily require the outright sale of computing hardware.
A compelling buy at this valuation, no matter what it is
Perhaps the big takeaway here is simply understanding that while Alphabet is often categorized as a technology company, that's not quite what it is. It's a service company. It's always served consumers, and now it serves a sizable slice of the technology industry too. That may also be why -- like most recurring-service stocks -- its ticker is usually priced and valued more like a service name, and that's OK.
There's never a bad time to own this consistent performer, but it's particularly attractive when you can get in at something of a discount, like you can right now.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $355,124!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,296,254!*
Now, it’s worth noting Stock Advisor’s total average return is 901% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 25, 2026.
James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.

Not Nvidia. Not Microsoft. This "Magnificent Seven" Stock Is the Cheapest Right Now.

Key Points
SpaceX makes up over half of Harvard's public equity portfolio and is a massive bet on the future.
TSMC is a great way to play the AI infrastructure boom, while Cerebras is focused on the inference market.
Amazon and Alphabet are two of the world's leading cloud computing companies, with strong growth ahead.
Harvard University has the largest academic endowment in the world, valued at nearly $68 billion. While the endowment invests in approximately 15,000 funds, it also holds individual stocks, with 75% of its public equity portfolio held in five AI stocks.
Let's take a closer look at these stocks to see if this is a genius move or a risky bet.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
1. Space Exploration Technologies
Space Exploration Technologies (NASDAQ: SPCX) -- otherwise known as SpaceX -- is Harvard's largest individual stock holding by a wide margin, representing over 52% of its public equity portfolio. Note, however, that this $2.2 billion investment would only account for about 3% of its total endowment. As such, the investment looks like a much smarter, less risky bet than it may appear on the surface.
SpaceX is very much an investment focused on the future, with ambitious goals including putting data centers in space, Earth-to-Earth cargo transport, asteroid mining, and even colonizing Mars. The company's reusable rockets have helped change the economics of space launches, and it is now trying to adapt that technology to its larger Starship rocket, opening up a whole new world of possibilities.
With bets on space, AI infrastructure, AI coding, AI models and applications, and satellite internet, SpaceX has huge growth potential, making it a solid stock to own.
2. Taiwan Semiconductor Manufacturing
If you want to invest in the AI infrastructure build-out without picking a chip technology winner, Taiwan Semiconductor Manufacturing (NYSE: TSM) is a great option. It currently accounts for more than 8% of Harvard's stock portfolio.
TSMC is the world's leading manufacturer of advanced logic chips, including graphics processing units (GPUs), custom AI accelerators, and central processing units (CPUs). The company has a near-monopoly in advanced chip manufacturing and strong pricing power, making it one of the best ways to play the data center build-out.
3. Cerebras Systems
Cerebras Systems (NASDAQ: CBRS) makes up nearly 6% of Harvard's stock portfolio and is an interesting bet on the future of inference technology. The company's wafer-sized chips are 30 times faster than GPUs for inference and six times faster than Groq's language processing units (LPUs). Meanwhile, the company has a large commitment from OpenAI.
However, given the high cost of SRAM (static random-access memory) and the specialized power management and cooling required, Cerebras' systems are expensive and are currently viewed as a high-end niche solution. If its superior technology can break into the mainstream, the stock could have some huge upside, with the inference market projected to become much larger than the one from AI model training.
4. Amazon
Amazon (NASDAQ: AMZN) is Harvard's fourth-largest individual stock holding, accounting for over 5.5% of its public equity portfolio, and the university increased its position by over a third during Q2. The company operates the world's largest cloud computing and e-commerce businesses, and both segments have been firing on all cylinders.
Amazon Web Services (AWS), Amazon's cloud computing unit, is seeing strong revenue growth driven by AI demand, and with a nearly $500 billion backlog and massive infrastructure investments, growth should continue to accelerate in the coming years. Meanwhile, the company's investments in AI and robotics are driving incredible operating efficiency in its e-commerce operations, resulting in robust profit growth. This makes the stock a top option to own.
5. Alphabet
Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) rounds out Harvard's top-five stock holdings, accounting for nearly 4% of its portfolio. Alphabet is the most complete AI company, having both a top-tier foundational model and world-class AI chips.
Alphabet's Tensor Processing Units (TPUs) are one of the company's biggest advantages, allowing it to train its AI models and run inference at significantly lower cost than competitors. This also gives the company some of the best cloud computing economics, with a one-year payback on its chip and networking investments when it uses its TPUs. Meanwhile, it feeds AI models directly into its Google Search platform, where it has a huge distribution and monetization edge. This makes Alphabet a top AI stock to own over the long haul.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,363,905!*
Now, it’s worth noting Stock Advisor’s total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 22, 2026.
Geoffrey Seiler has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Harvard's Endowment Has 75% of Its Stock Portfolio in 5 AI Stocks. Genius Move or Dangerous Trap?

Key Points
Nuclear energy is experiencing a global revival, driven by energy security, decarbonization efforts, and soaring electricity demand.
Uranium supplies are struggling to keep pace as inventories shrink and utilities compete to secure long-term fuel contracts.
Uranium prices could remain near $100 per pound, benefiting producers such as Cameco and Uranium Energy.
The nuclear revival is gaining momentum. Governments worldwide are turning to nuclear energy to strengthen energy security. Meanwhile, hyperscalers need reliable, around-the-clock power to support surging electricity demand. Nuclear energy stands out for its emission-free, 24/7 baseload power, unlike intermittent renewables.
That combination is strengthening the outlook for nuclear energy and its essential fuel, benefiting uranium miners like Cameco (NYSE: CCJ) and Uranium Energy (NYSEMKT: UEC). With spot prices near $90 per pound and approaching historic highs, investors are asking a crucial question: Where does uranium go from here? Here's what I predict will happen to uranium next.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
New nuclear reactors are coming online at a rapid rate
In the mid-2000s, nuclear energy was enjoying a resurgence. However, economic shifts, project delays, and the 2011 Fukushima disaster derailed this momentum and delivered a final blow to the industry for a decade.
However, things have shifted recently. At COP28 in 2023, over 20 nations, including the U.S., U.K., Japan, Canada, South Korea, and France, pledged to triple global nuclear energy capacity by 2050. The driving force behind this pledge was net-zero carbon-emission goals, which would be nearly impossible without nuclear energy.
China is leading the charge, with 38 commercial reactors under construction. The country aims to approve 10 to 15 gigawatts (GW) of new capacity annually and hopes to surpass the U.S. in nuclear generation by the end of the decade. In Japan, reactor restarts are working through regulatory approval. Meanwhile, in the U.S., power purchase agreements are bringing decommissioned plants, such as Three Mile Island Unit 1 and Palisades, back online.
In addition, President Donald Trump's administration wants to quadruple nuclear energy capacity by 2050. As part of this, policymakers want to have 10 new large-scale commercial nuclear reactors under construction by 2030. The Department of Energy is also fast-tracking testing of advanced nuclear reactors through its Reactor Pilot Program.
Uranium faces structural shortages as demand surges
Nuclear fuel procurement differs from oil and gas. Nuclear fuel accounts for no more than 10% of a plant's operating expense, so utility fuel buyers are price-insensitive and lock in long-term supplies. After Fukushima, utilities could secure cheap secondary supplies and rely on the spot market for uranium. However, buyers are now looking to secure fuel commitments for the next decade.
Uranium markets are reaching an inflection point. Inventories have dwindled, so buyers must rely on the primary mine supply. The market is facing bottlenecks. For example, in Kazakhstan, which accounts for 40% of global output, in situ recovery (ISR) mining operations have been hampered by shortages of sulfuric acid.
On top of that, energy demand is booming. Rising artificial intelligence (AI) workloads and growing data center infrastructure are driving incredibly strong demand for power. Total data center power consumption is projected to double by 2030, while total U.S. electricity demand is estimated to expand 25% by 2030.
Technology companies are making deals left and right to secure energy. Constellation Energy (NASDAQ: CEG), which owns and operates the largest nuclear energy fleet in the U.S., has signed long-term power purchase agreements with Alphabet, Amazon, Microsoft, and Walmart.
As part of this, Constellation, Vistra, and other power providers are using power uprates to extend the life of their nuclear plants and bring decommissioned plants back online.
What's next for uranium prices
Uranium prices are around $90 per pound, but supplies are likely to remain tight over the next decade. Utilities face a widening uncommitted supply gap, with cumulative uncommitted uranium requirements estimated to exceed 800 million pounds of triuranium octoxide, also called yellowcake, through 2035.
Spot uranium prices will likely remain elevated around $100 per pound for the next few years, as demand surges amid the deficit, with some experts arguing this is necessary to justify the investments needed to finance the next generation of underground and open-pit mines. Bank of America projects uranium could jump to $130 per pound by next year, a nearly 44% increase over today's spot price.
Global energy demand is growing, and nuclear energy is poised to play a crucial role in filling those gaps, benefiting uranium miners. Cameco uses long-term contracts and has agreements to deliver 28 million pounds of yellowcake annually over the next five years. Meanwhile, Uranium Energy is completely unhedged, giving investors exposure to rising spot prices but also adding volatility if spot prices decline meaningfully.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. If you’d invested $5,000 then, you’d be sitting on $2,885,382 today.*
Now, for the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. It’s a key player in the $1.8 trillion space race, and with the stock recently sitting 20% off its highs, the window to get in early is closing fast.
*Stock Advisor returns as of October 22, 2026.
Courtney Carlsen has positions in Alphabet, Cameco, Constellation Energy, Microsoft, and Vistra. The Motley Fool has positions in and recommends Alphabet, Amazon, Cameco, Constellation Energy, Microsoft, Vistra, and Walmart. The Motley Fool has a disclosure policy.

Uranium Is Near $90 a Pound. Here's My Prediction for What's Ahead for the Fuel.

Key Points
Investors' focus should begin to pivot more toward non-infrastructure players as the AI boom matures.
Alphabet is in a strong position as it controls the entire AI stack.
In my view, artificial intelligence (AI) stocks will once again lead the market higher in 2027. However, I think there will start to be a rotation away from the pure-play pick-and-shovel infrastructure players and toward the hyperscalers that control the bulk of the spending. And against that backdrop, I think Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is poised to be the best performing stock among AI mega-caps in 2027.
Whenever a new technological evolution is in its early phases, a large fraction of the gains go to the hardware companies that lay the foundation for it. However, in later stages, the gains should increasingly go to the companies that are benefiting from the prior investments.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
This pattern could certainly be seen in the dot-com boom. Hardware giants like Cisco, Sun Microsystems, and JDS Uniphase led the early build-out, but companies like Amazon and Google (now Alphabet) were the ones that captured the vast majority of the cumulative economic value over the long run.
I think a similar dynamic should start to play out again beginning next year, with Alphabet in position to be the clearest beneficiary. One of the biggest differences between the dot-com era and the AI era is that some of the companies funding the current build-out are the same ones building the end-user applications and platform ecosystems. Back in the late 1990s, it was telecoms that were doing most of the heavy lifting on infrastructure, while today it is the hyperscalers themselves. That is also one of the big reasons why these companies have been increasingly designing their own chips, and this is where Alphabet shines.
During the early phases of a new infrastructure build-out, there typically are large supply-and-demand imbalances. In this case, that gave semiconductor companies massive pricing power. The greatest example of this can be seen in the memory market, where prices have skyrocketed to unprecedented heights due to the shortage of memory chips. However, over time, supply chains normalize, production catches up to demand, and hardware prices come down. Investors have already started pricing in the potential of this happening.
Multiple advantages
In this middle phase that we are entering now, Alphabet has the biggest advantage because it has designed its entire ecosystem around its powerful custom Tensor Processing Units (TPUs). These processors give it a huge cost advantage in training its own AI models and running inference workloads. They also provide it with the strongest long-term cloud computing economics.
When using its own chips, Alphabet is getting a payback on its chip investments in about a year, compared to two to three years for rival hyperscaler Amazon. Meanwhile, a one-year payback on custom compute allows Alphabet to reinvest its operational cash flow back into data center expansion much faster than peers that are more reliant on Nvidia's graphics processing units (GPUs) and therefore face longer payback horizons. Its chips are so highly regarded that, in association with its design partner, Broadcom, it is also selling them directly to compute-starved Anthropic, giving it another high-margin revenue stream.
Ultimately, Alphabet is poised to be one of the biggest AI winners because it controls every single layer of the AI stack. This starts with its custom chips, then moves to it having its own top-tier AI model, Gemini. Alphabet also has its own cloud platform (Vertex AI) and its own cloud security solution (Wiz). Alphabet then has the important product layer with Google Search, YouTube, and its other apps, where it can incorporate its Gemini model to improve its products and drive growth.
Alphabet also controls a large piece of the distribution layer through its ownership of the Chrome browser and the Android operating system, to go along with its revenue-sharing agreement for Google Search to be the default search engine on Apple devices. This essentially makes it the gateway to the internet and, increasingly, AI. And finally, it also controls the ad layer, as its ad network makes it easier to monetize consumer AI.
Altogether, this gives it the ultimate AI flywheel, and the value of that should start to shine through even more next year. That's why I think Alphabet will be the best-performing mega-cap AI stock in 2027.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $370,440!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,330,110!*
Now, it’s worth noting Stock Advisor’s total average return is 924% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 21, 2026.
Geoffrey Seiler has positions in Alphabet, Amazon, and Broadcom. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Cisco Systems, and Nvidia. The Motley Fool has a disclosure policy.

Prediction: This Artificial Intelligence (AI) Stock Will Be the Biggest Winner of 2027

Key Points
Anthropic and OpenAI helped kickstart the artificial intelligence (AI) revolution with their generative models, Claude and ChatGPT, respectively.
Both companies are valued near $1 trillion ahead of their rumored initial public offerings.
Alphabet is a savvy way to gain exposure to OpenAI and Anthropic at a much lower cost.
The artificial intelligence (AI) revolution has produced two of the fastest-growing start-ups in history. OpenAI burst onto the scene in late 2022 when it launched ChatGPT, introducing consumers around the world to generative AI. Meanwhile, Anthropic has emerged as a formidable competitor with its Claude models.
Both companies' growth has been extraordinary. Following a $122 billion funding round in March, OpenAI reached a valuation of $852 billion, while Anthropic was valued at $965 billion after its Series H round in May. Naturally, AI investors are eager to know when they can buy shares.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Anthropic confidentially filed for an initial public offering (IPO) in June and could make its public debut as soon as next month. OpenAI has also explored going public, although its timing remains uncertain.
Here's an interesting alternative: Rather than waiting for either company to go public at a valuation approaching the trillion-dollar milestone, investors can buy Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) instead. Alphabet stands to benefit regardless of which AI developer ultimately wins. Read on to learn why.
Google Cloud already benefits from OpenAI and Anthropic
One of Alphabet's quiet advantages is that it doesn't need its Gemini AI models to beat ChatGPT or Claude. That reason is Google Cloud provides compute infrastructure to its competitors. In May 2025, OpenAI agreed to use Google Cloud's capacity to train and deploy its AI models.
This relationship is particularly interesting because up to that point, OpenAI was primarily tied to Microsoft Azure. Adding Google provided OpenAI with an alternative source of AI compute while giving Alphabet a hyperscaler customer whose infrastructure requirements are enormous.
Anthropic's relationship with Google runs even deeper. In October 2025, Anthropic announced its use of Google's custom silicon, called Tensor Processing Units (TPUs). In April, this relationship was expanded to include multiple gigawatts of TPU capacity expected to come online in 2027.
These arrangements create an attractive business model for Alphabet because the company can develop AI products for consumers while simultaneously supplying infrastructure that competing enterprises need.
The strategy is already producing impressive results. During the second quarter, Google Cloud revenue surged 82% year over year to $24.8 billion. While not all of that growth came from OpenAI and Anthropic, their expanding infrastructure commitments underscore why Google Cloud should remain a major beneficiary of the AI boom.
Alphabet is sitting on a generational multibagger
Alphabet isn't just an infrastructure partner to Anthropic. It's also one of the company's largest investors. Google initially invested in Anthropic in 2023. But by early 2026, Alphabet had invested roughly $3 billion in Anthropic and owned an estimated 14% equity stake. In April, Google announced plans to invest up to another $40 billion. The deal was structured to include an initial $10 billion commitment, with an additional $30 billion contingent on Anthropic meeting certain performance milestones.
Why is Google investing so heavily in a company whose generative models compete directly with Gemini?
The answer is simple: Alphabet is positioned to benefit from Anthropic's success in multiple ways. First, its equity investment will appreciate as Anthropic's valuation increases. Additionally, Anthropic is a major customer for Google's cloud infrastructure and custom AI chips. Third, Google's tie-up with Anthropic gives it exposure to an alternative AI ecosystem, reducing its dependence on Gemini emerging as the industry's go-to model.
This is an unusually versatile position to be in. If Anthropic goes public at its reported $2 trillion valuation, a hypothetical 14% stake would be worth $280 billion. This shows how Alphabet can participate in one of the largest IPOs in history without investors needing to lift a finger and buy Anthropic stock directly.
Alphabet is less speculative than an IPO stock
OpenAI's valuation of $852 billion represents approximately 17 times its reported $50 billion annualized revenue run rate. Meanwhile, Anthropic's $965 billion valuation represents 14 times its Q3 annualized revenue run rate of $67.2 billion. At a $2 trillion IPO valuation, Anthropic would trade at nearly 30 times its current revenue run rate.
These are enormous premiums, especially considering the capital expenditures required to develop advanced AI. Moreover, OpenAI remains unprofitable while Anthropic recently reported a small profit on an adjusted operating basis.
Alphabet offers a much different financial profile. During Q2, the company generated $120 billion in revenue and roughly $40.8 billion in operating income. Alphabet stock trades around a 23 times forward price-to-earnings (P/E) ratio -- a relatively reasonable valuation considering its established and highly profitable advertising and cloud businesses.
While OpenAI and Anthropic could become respected public companies, their anticipated valuations already reflect high expectations. Alphabet offers investors exposure to both AI developers through Google Cloud, an existing equity stake in Anthropic, and its own growing AI ecosystem. Combined with its AI-driven revenue and robust profitability, I see Alphabet as the more compelling AI stock to buy and hold ahead of these anticipated mega-IPOs.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 20, 2026.
Adam Spatacco has positions in Alphabet and Microsoft. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool has a disclosure policy.

Not Anthropic. Not OpenAI. This Is the Artificial Intelligence (AI) Stock I'd Buy Before the Next Mega-IPO.

Key Points
Long-term stock winners share traits you can measure with simple tests.
No company aces every test, so the goal is finding businesses with at least one win.
Copart and Netflix pass their tests even though both stocks fell more than 35% over the past year.
Back on Dec. 27, 2010, I bought some Google stock at a split-adjusted $15.03 a share. The company has since renamed itself Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), split its stock twice, and doubled down on artificial intelligence. On Oct. 16, 2026, the shares closed at $340.59.
That's a 2,166.1% gain in nearly 16 years. A $1,000 stake from that day would be worth about $22,661 now. I'd love to tell you I saw it all coming, but I did not predict the AI boom or YouTube's growth. What I saw was a business with traits that tend to show up in long-term winners. Those traits can be measured. Below are six of them, each paired with a company that clearly illustrates it and a specific test you can apply to any stock.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Fair warning: a couple of these stocks have had a rotten year as of this writing. That's part of the lesson: don't sell a great stock in the inevitable dips.
1. Patience and compounding: Coca-Cola
My test: 25 or more straight years of dividend raises, paid for with actual free cash flow.
Coca-Cola (NYSE: KO) is the stock market's slow cooker. Nothing much seems to happen for hours, and then dinner is ready. The company bumped its quarterly dividend from $0.51 to $0.53 this year, its 64th annual raise in a row. That streak is older than the moon landing.
The payout is backed by trailing free cash flow of about $14.3 billion, which lines up almost exactly with $14.4 billion in net income. The stock yields 2.4% and is up 32.9% this year, which is a wild ride by Coke's stable standards. Its 10-year price gain of 121% looks sleepy compared to the others, but that figure excludes dividends.
Reinvest those for a few decades and the slow cooker starts to look pretty clever. Coca-Cola's stock has quadrupled in price over the last 25 years, but the total return (with reinvested dividends) is about 8.3x:
2. High returns on invested capital: Alphabet
My test: Return on invested capital (ROIC) above 15%, year after year.
ROIC answers a simple question: if you hand this company a dollar, how much profit does it squeeze out of it each year? Alphabet's answer is about 32 cents, tops among these six. Its operating margin is 34% on roughly $446.6 billion of trailing revenue. Very few companies earn that kind of margin at that size.
3. Cash generation: Monster Beverage
My test: Free cash flow of at least 90% of net income, plus little or no debt.
Profits are an accountant's opinion; cash is a proven fact. Monster Beverage (NASDAQ: MNST) turned roughly $2.1 billion of net income into about $2.1 billion of free cash flow over the past year. That's a 99% conversion rate. It has zero debt, and its current assets cover current liabilities 3.7 times over.
Strong companies can fail this test during heavy back-end investment cycles. For example, Alphabet's free cash flow over the past year was about 22% of net income. Much of that gap comes from investment gains, including a big markup on its stake in Space Exploration Technologies when SpaceX went public.
Nice for the income statement, but you can't pay a dividend with an unrealized paper profit. Strip out the SpaceX equity gains, and Alphabet converts less than half of its remaining earnings into free cash, thanks to all that data center spending. It's still a great business, but Alphabet gets a failing grade on this particular test, at least for now.
4. A durable membership moat: Costco
My test: Membership renewal rates around 90% or higher.
Here's a somewhat strange business model. Costco Wholesale (NASDAQ: COST) barely makes money on the stuff it sells, with a 12.8% gross margin and a 3.9% operating margin. Its real product is the membership card, and customers pay for it before they buy a single rotisserie chicken.
And they keep paying. Costco ended fiscal 2026 with a 92.3% renewal rate in the U.S. and Canada and an 89.8% renewal rate worldwide. Paid memberships climbed to 84.1 million from 81.0 million a year earlier. Costco sells loyalty in bulk, too.
Ironically, Costco's stock isn't cheap. At 47.3 times trailing earnings, this is the priciest stock in my group of examples. That's the price of a world-class moat.
5. Owner-minded management: Copart
My test: Insiders own 5% or more, and the balance sheet carries little or no debt.
Copart (NASDAQ: CPRT) sells wrecked and used cars through online auctions. That's not glamorous. But insiders own 9% of the company, and debt is a rounding error at 1% of equity. Copart also holds about $4.5 billion in cash, or 17.4% of its $25.9 billion market cap. People who own a big slice of a company tend to run it as if they'll still own it in 20 years.
Now the uncomfortable part. Copart shares are down 37% over the past year and 24.6% over five years. Owner-minded managers can't always stop a stock from falling when the car market is shrinking. They just make it more likely the company exits a slump with its balance sheet intact.
Over the past 10 years, Copart's stock has risen 310%. I'll be watching to see whether management puts that cash to work while the shares are cheaper.
6. Reinvestment runway: Netflix
My test: This is a multi-part checkup. ROIC above 20%, revenue growth above 10% a year, and profits going back into the business instead of out the door as dividends.
A company with a long runway can reinvest its profits at high rates of return for many years. Netflix (NASDAQ: NFLX) pays no dividend. Most of its spare cash goes back into shows, movies, and new ways to keep you on the couch. It earns 31.1% on invested capital, and revenue has grown 12.6% a year over five years.
Netflix's stock didn't get the memo. Shares are down 41.5% over the past year and trade at 18.5 times forward earnings. The PEG ratio of 0.86 is the lowest in this group. Either the market sees trouble the numbers haven't shown yet, or the runway is on sale. Both possibilities deserve study.
Spoiler alert: I'm still a Netflix bull in 2026.
Putting the tests together
None of these companies ace every test:
Alphabet is failing on cash conversion right now.
Coca-Cola's price chart is a snooze without dividends.
Monster has never paid a penny of dividends.
Copart and Netflix pass their own tests but have lost value over the past year.
Costco generates a lot of cash but also has $7.3 billion in long-term debt.
That's fine. The purpose of these tests is to identify businesses with sufficient strengths to weather rough stretches. My Google shares had plenty of those, and I'm glad I never sold during any of them.
Should you buy stock in Netflix right now?
Before you buy stock in Netflix, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Netflix 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’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 19, 2026.
Anders Bylund has positions in Alphabet and Netflix. The Motley Fool has positions in and recommends Alphabet, Copart, Costco Wholesale, Monster Beverage, and Netflix. The Motley Fool has a disclosure policy.

6 Signs of a Winning Stock, Each Shown by a Real Company

The S&P 500 Index ($SPX) (SPY) is up by +0.57% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down by -0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.52%. December E-mini S&P futures (ESZ26) are up +0.58%, and December E-mini Nasdaq futures (NQZ26) are up +1.51%.
Stock indexes are mostly higher today, with chipmakers and AI-infrastructure stocks leading the broader market higher after last week’s selloff. Earnings optimism is lifting stocks ahead of this week's earnings results from Meta Platforms, Tesla, and Netflix. Also, weaker crude oil prices today have improved market sentiment and are supportive of stocks.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.
On the downside, homebuilders are under pressure after today’s US economic news showed the Oct NAHB housing market index fell 3 points to a 14-year low of 29, below expectations of 31.
Mostly better-than-expected Chinese economic news is positive for global growth prospects and stocks. China Q3 GDP rose +1.2% q/q and +4.5% y/y, stronger than expectations of +1.0% q/q and +4.4% y/y. Also, China's Sep industrial production rose +5.5% y/y, right on expectations and the largest increase in 6 months. In addition, China's Sep retail sales rose +1.1% y/y, stronger than expectations of +0.5% y/y and the largest increase in 6 months. Finally, China's Sep surveyed jobless rate unexpectedly fell -0.1 to 5.2%, below the expected 5.3% and signaling a stronger labor market. On the downside, China's Sep new home prices fell -0.14% m/m, the fortieth consecutive month of declines.
Stocks have support from the prospect of solid quarterly earnings results. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +25% from a year earlier, up from a July estimate of 22%. As of today, 45 of the S&P 500 companies have reported results, with 80% beating estimates.
Nov WTI crude oil prices (CLX26) are moving lower today on some profit-taking after last week's rally to a 5-week high. US Energy Secretary Wright said Persian Gulf oil flows have recovered to about 80% of their pre-war level, though refined-product shipments remain constrained. Crude oil prices have underlying support from concerns about disruptions to Middle Eastern energy supplies after Houthi rebels in Yemen targeted Yanbu in Saudi Arabia, a significant Red Sea port for Saudi oil exports that avoids the Strait of Hormuz, with missiles and drones. Also, the UK Maritime Trade Operations reported that two tankers were attacked in the Persian Gulf near Saudi Arabia's port city of Jubail over the weekend.
Markets are discounting a 17% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets are mixed today. The Euro Stoxx 50 fell to a 1-week low today and is down -1.18%. China's Shanghai Composite closed up +0.39%. Japan's Nikkei-225 Stock Average fell to a 1-month low and closed down -0.62%.
Interest Rates
December 10-year T-notes (ZNZ6) are down -4 ticks. The 10-year T-note yield is up +3.2 bp to 5.127%. Today’s stock rally has reduced safe-haven demand for government debt, weighing on T-notes. Losses in T-notes are limited amid some safe-haven buying due to the social unrest in France. Weaker WTI crude oil prices today are also lowering inflation expectations and supporting T-notes.
European government bond yields are moving higher today. The 10-year German bund yield is up +3.6 bp to 3.462%. The 10-year UK gilt yield is up +5.7 bp to 5.430%.
The German Bundesbank said in a report today that "inflation risks in the Eurozone are clearly tilted to the upside."
Markets are discounting an 8% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI-infrastructure stocks are moving higher today, recovering some of last week’s rout. The iShares Semiconductor ETF (SOXX) is up more than +2%. SanDisk (SNDK) is up more than +6% to lead gainers in the S&P 500 and Nasdaq 100, and Western Digital (WDC) is up more than +6%. Also, Marvell Technology (MRVL) is up more than +5%, and Intel (INTC), Seagate Technology Holdings Plc (STX), Lam Research (LRCX), and Micron Technology (MU) are up more than +4%. In addition, Advanced Micro Devices (AMD) and Applied Materials (AMAT) are up more than +3%, and Analog Devices (ADI), KLA Corp (KLAC), Broadcom (AVGO), and Qualcomm (QCOM) are up more than +2%.
The Magnificent Seven stocks, excluding Meta, are up today, supporting broader market gains. Amazon.com (AMZN) is up more than +4% to lead gainers in the Dow Jones Industrials, and Tesla (TSLA) is up more than +3%. Also, Nvidia (NVDA), Alphabet (GOOGL), and Microsoft (MSFT) are up more than +1%. In addition, Apple (AAPL) is up +0.14%. Conversely, Meta Platforms (META) is down -0.87%.
Cloud infrastructure stocks are climbing today. Applied Digital (APLD) is up more than +8%, and Nebius Group NV (NBIS) and Lumentum Holdings (LITE) are up more than +3%. Also, CoreWeave (CRWV) and Arista Networks (ANET) aew up more than +2%, and Oracle (ORCL) is up more than +1%.
Home builders and building supplies are slipping today after the US Oct NAHB housing market index fell more than expected to a 14-year low. DR Horton (DHI) and Pulte Group (PHM) are down more than -2%, and Lennar (LEN), KB Home (KBH), Toll Brothers (TOL), and Builders Firstsource (BLDR) are down more than -1%.
Disc Medicine (IRON) is up more than +39% after announcing that its investigational drug bitopertin met all primary and secondary endpoints in a Phase 3 Apollo trial in adults and adolescents with erythropoietic protoporphyria.
Cleveland Cliffs (CLF) is up more than +13% after reporting Q3 adjusted Ebitda of $612 million, above the consensus of $591.5 million.
Datadog (DDOG) is up more than +5% after Bernstein upgraded the stock to outperform from market perform with a price target of $350.
NRG Energy (NRG) is down more than -5% to lead losers in the S&P 500 after Jeffries cut its price target on the stock to $131 from $160.
Ameriprise Financial (AMP) is down more than -3% after Bank of America Global Research double-downgraded the stock to underperform from buy with a price target of $445.
Earnings Reports (10/19/2026)
AGNC Investment Corp (AGNC), BOK Financial Corp (BOKF), Cleveland-Cliffs Inc (CLF), Crown Holdings Inc (CCK), Fifth Third Bancorp (FITB), FNB Corp/PA (FNB), RLI Corp (RLI), Steel Dynamics Inc (STLD), W R Berkley Corp (WRB), Western Alliance Bancorp (WAL), Wintrust Financial Corp (WTFC), Zions Bancorp NA (ZION).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Strength in Chipmakers and AI-Infrastructure Stocks Lead the Broader Market Higher

Key Points
Amazon and Alphabet have fast-growing cloud computing segments and strong core businesses.
In addition, Amazon and Alphabet's custom chip businesses give them an edge.
Any slowdown in AI spending would lead to strong free cash flow for both companies.
If I were going to buy two "Magnificent Seven" stocks and hold them for the rest of the decade, my choice would be easy. I'm buying Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Amazon (NASDAQ: AMZN). The two companies actually have a lot in common, as they are two of the world's largest cloud computing providers. Over the next several years, I think these are the type of AI stocks to own.
The pick-and-shovel providers of AI infrastructure, like Nvidia, have clearly dominated the early phase of AI. Right now, there is a rush to build out AI data centers, which has driven huge demand for chips, networking, and other components. However, as the market starts to mature, the large cloud providers, such as Alphabet and Amazon, will be the best positioned.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Cloud computing giants
The reason is simple: The big cloud computing stocks can win in both a high-spending environment and a slow-spending one. Right now, both Amazon and Alphabet are getting strong returns on their AI infrastructure spending. Amazon has said it is signing five-year or longer contracts and getting a payback within two to three years, with chips having about a six-year useful life.
Meanwhile, Alphabet is getting a payback in around two years, and in half that time when it uses its own tensor processing units (TPUs). With these types of returns getting locked in, it makes sense to invest as much as possible into building out AI infrastructure.
However, the companies also win when demand starts to slow. In that scenario, Amazon and Alphabet can cut back on their AI infrastructure capex, which in turn will lead to huge free cash flow generation. They will then be able to quickly pay off any debt associated with their AI investments or start buying back stock. In essence, they are in a win-win scenario.
Amazon and Alphabet are also in a strong position due to their custom chip businesses. Over the long term, they should be able to achieve much better returns than providers that rely on Nvidia GPUs, like neoclouds or SpaceX. Alphabet is already starting to see this, and Amazon should see better returns as its custom chips become a bigger part of its business.
Strong core businesses
In addition to their fast-growing cloud computing segments, both Alphabet and Amazon have strong core businesses that generate substantial cash flow to fund their AI infrastructure build-outs.
Alphabet, of course, is the world's search leader with Google Search. As search and AI chatbots blend together, Alphabet is in an enviable position because it controls the distribution. By owning the world's leading browser and smartphone operating system, together with a revenue-sharing deal with Apple to be the default search engine on its devices, Alphabet is the de facto gateway to the internet.
Meanwhile, it has incorporated its top-tier Gemini AI model into its search solution with features like AI Overviews and AI Mode, which bring AI to consumers without them having to change their normal routines or open a separate app.
By having its own chips, Alphabet is also able to train its AI models more cheaply than competitors. At the same time, its vast ad network allows it to monetize consumer AI better than newer start-ups, giving it a significant overall advantage in the space.
Amazon, meanwhile, remains the world's largest e-commerce provider. The business continues to see strong sales, and Amazon is also pushing into new areas to drive growth. Meanwhile, the company's investments in robots, where it is the world's largest manufacturer, and AI have created tremendous efficiencies, which have led to strong operating leverage in its e-commerce operations.
Both Alphabet and Amazon have multiple avenues to be AI winners, making them my top Magnificent Seven stocks to own for the long term.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 19, 2026.
Geoffrey Seiler has positions in Alphabet and Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Nvidia. The Motley Fool has a disclosure policy.

2 "Magnificent Seven" Stocks to Buy and Hold for the Rest of the Decade

Key Points
The S&P 500 is trading close to its most expensive level as measured by the Shiller CAPE ratio.
When the Shiller CAPE ratio reaches levels around 40, the stock market historically crashes.
Even if a crash is on the way, Alphabet stock looks like an attractive investment in the long-run.
Artificial intelligence (AI) has been one of the biggest drivers of the stock market's rally over the last few years. While this enthusiasm has propelled the S&P 500 to record highs, there's a growing concern that investors may be getting ahead of themselves.
The S&P 500 Shiller CAPE ratio, which measures stock valuations against 10 years of inflation-adjusted earnings, is hovering above 41. Readings this elevated are extremely rare, raising questions about whether the market is due for a correction. After several years of exceptional returns, investors should think about what stocks they want to own if sentiment suddenly changes.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
During downturns, I prefer companies with established competitive advantages, diversified revenue streams, and enough financial flexibility to keep investing while weaker competitors fall behind. This is why Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is near the top of my shopping list.
Alphabet's business is built to withstand uncertainty
One of Alphabet's biggest strengths is that so many of its products are embedded in everyday life. Think about how frequently people use Google Search, Gmail, YouTube, Google Maps, Android, and Chrome. Although the use of these services isn't a discretionary purchase in the traditional sense, they are integrated into how billions of people around the world communicate, navigate, work, and discover information.
The advantage of this model is that Alphabet can attract users through its ecosystem of free services and monetize people's activity through advertising. Since its products are interconnected, Alphabet can easily introduce new features and services to existing customers rather than constantly creating new products and marketing to different demographics.
Alphabet's reach extends far beyond consumers. Through Google Cloud, Alphabet provides computing infrastructure, cybersecurity, data analytics, and AI services to enterprise customers. This diversified business model comes in handy during economic downturns. Advertising budgets often decline when businesses become cautious, but enterprise technology budgets usually follow different priorities.
The most compelling thing about Alphabet is the company's ability to vertically integrate its various businesses. Within Google Cloud, the company offers its own custom silicon, called Tensor Processing Units (TPUs). It also operates data centers, builds AI models through Google DeepMind, and distributes AI-powered products through Search, Gemini, and Workspace.
How has Alphabet stock held up during market crashes?
During the 2008 financial crisis, Alphabet shares declined 55% for the year. The recession pressured advertising spending, and investors abandoned growth stocks. The stock also experienced a peak-to-trough drawdown of roughly 31% during the COVID-19 crash in early 2020. Most recently, Alphabet lost roughly 39% of its value during the 2022 bear market as rising interest rates and economic uncertainty dragged on the technology sector.
While those are substantial losses, here's what makes Alphabet interesting. Despite experiencing multiple severe downturns, the company continued growing its businesses, launching new products, and quietly strengthening its competitive position. The gray-shaded columns in the chart below mark recessions. The theme here is that investors who bought Alphabet stock during market downturns and held on to their positions benefited materially from the company's subsequent recoveries.
Alphabet's biggest advantage is its balance sheet
During the second quarter, Alphabet generated $119.8 billion in revenue, representing 24% growth year over year. Its Google Services segment generated $94.5 billion in revenue while Google Cloud grew an impressive 82% to $24.8 billion. This shows how Alphabet is able to benefit from both an established advertising franchise and the AI economy.
The real story is that Alphabet generated $39.1 billion in operating cash flow during the second quarter, giving the company substantial financial resources to fund research, infrastructure, and other investments. The company ended June with $242.5 billion in cash and marketable securities.
Alphabet's financial flexibility gives the company the ability to invest in AI infrastructure, develop new products, pursue acquisitions, and maintain shareholder distributions (i.e., dividends) without depending entirely on outside financing.
Against this backdrop, Alphabet stock could still fall substantially if the market crashes. Nevertheless, history suggests the company's diversified ecosystem, vertical integration, and extraordinary financial horsepower put Alphabet in a good position to endure a downturn and emerge even stronger. Rather than attempting to time the next stock market crash, I'd consider buying Alphabet stock gradually over time during dips and holding it for the long term.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 19, 2026.
Adam Spatacco has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

If I Could Only Buy 1 Artificial Intelligence (AI) Stock Before the Market Crashes, It Would Be This One

Key Points
YouTube, Waymo, and Google Search would be exceptional on their own, but they all fall under the Alphabet umbrella.
While capital expenditures reduce free cash flow, there are very few businesses that are better equipped than Alphabet to turn AI spending into lasting profits.
The current valuation makes Alphabet look like a fantastic opportunity for patient investors.
The "Magnificent Seven" combined represent more than one-third of the entire market capitalization of the S&P 500 index. When investors call out concentration at the top, it's these businesses that get the finger pointed at them. Seven companies have an outsize impact on equity returns.
But this group is separated for a reason. While each business is unique, they are characterized by industry dominance, technological prowess, incredible profits, and a huge focus on artificial intelligence (AI). And they operate from a position of financial strength.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
If I could own only one Magnificent Seven stock for the next decade, it would be this one. It might be the ultimate technology enterprise to buy.
Examine Alphabet's key business lines
In my view, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) shines brighter than its peers. This company doesn't make money from a single activity. It's a comprehensive technology juggernaut; just look at the key business lines.
YouTube is one of the most valuable segments. Investors shouldn't downplay how successful it has become.
According to Nielsen data, YouTube commanded a 14.2% share of daily TV viewing time in the U.S in July. It has had a sizable lead on Netflix in this regard for quite some time. And it monetizes that viewership mainly through ads, with some help from subscriptions.
Then there's Waymo, which is winning the autonomous driving race. Last month, this service was completing 500,000 rides per week, running laps around rival Tesla. Waymo is currently available in 15 U.S. cities, with plans to expand domestically and internationally.
We can't forget the company's crown jewel, Google Search. This is what put the business on the map. It continues to dominate today, representing 53% of Alphabet's revenue. The platform handles billions of queries each day.
Google Search, which has a commanding 90% market share, possesses a robust network effect. It gets better with every query, which constantly improves the algorithm. That further drives greater usage. Ultimately, advertisers value this.
Taken together, Alphabet benefits from multiple secular trends. Streaming entertainment, autonomous vehicles, and digital advertising are notable growth drivers that will propel the business for years to come.
The future is in the cloud
Two other powerful secular tailwinds have yet to be discussed: cloud computing and AI. The shift of IT spending to the cloud has lifted Google Cloud to new heights. Its revenue totaled $24.8 billion in the second quarter (ended June 30), up 82% year over year. And that figure is 1,081% higher than seven years before.
Its profits are also surging. Operating income came in at $8.8 billion in Q2, more than tripling year over year. That's the result of having a scale advantage. Google Cloud's two larger rivals understand this.
Of course, AI has started to play a bigger role here. Alphabet is leaning into its advantage to ride the wave. It has a full-stack playbook, providing its own chips, training its own models, running its own data centers, and offering consumer and enterprise products and services.
Alphabet is one of the major hyperscalers, as it plans to spend $200 billion (at the midpoint) on technical infrastructure in a race to establish itself as a leader in the age of AI. Heightened capital expenditures (capex) have dealt a direct blow to free cash flow, which turned negative in Q2. And the business is taking on more debt to fund the build-out.
This just means that investors have to be extremely patient with Alphabet, perhaps more so than at any point in history. How the AI capex boom plays out is still an open question. But this company is in an extremely favorable position. There are very few businesses that are better equipped to turn AI spending into lasting profits.
With Alphabet's forward price-to-earnings ratio of 22.8, maybe the market is underestimating it. For patient investors with a 10-year view, this looks like a fantastic opportunity.
Should you buy stock in Alphabet right now?
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 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’d have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,315,732!*
Now, it’s worth noting Stock Advisor’s total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of October 18, 2026.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Netflix, and Tesla. The Motley Fool has a disclosure policy.

Periodand min./max. price, $	Price change, %		Volatility, %		Volume, $
Periodand min./max. price, $	GOOGL	Industry	GOOGL	Industry	Volume, $
Yesterday 316.6 - 323.9	-3.49	0.40	4.49	0.78	—
Week 316.6 - 337.3	-7.33	6.51	5.01	2.16	41.16B
Month 316.6 - 359.4	-8.34	5.11	9.55	10.23	183.21B
3 Months 316.6 - 384.5	-4.76	11.44	14.77	18.28	460.62B
6 Months 314.9 - 408.6	-10.41	1.50	20.32	28.74	972.63B
Year 266.5 - 408.6	15.79	3.62	31.24	38.00	1.76T
3 years 120.2 - 408.6	154.13	25.48	52.81	71.52	3.33T
5 years 83.3 - 408.6	112.24	153.87	71.71	96.95	4.33T
All time 2.4 - 191.8	6,258.84	7.88	—	—	2.14T

Alphabet Inc.

Price and volatility history

Risk ratios