Alphabet’s stock price surged more than 60% last year.
Alphabet has quietly integrated artificial intelligence into its entire ecosystem.
The company’s profitability is better than its peers, positioning Alphabet for long-term success.
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Artificial intelligence (AI) has undoubtedly had an impact on the stock market over the past few years. Especially a small group called the “Seven Heroes”—— NVIDIA, apple, Microsoft, Amazon, meta platform, Teslaand letter(Nasdaq: Google)(Nasdaq: Google) — are pushing the frontiers of next-generation hardware and software.
Shares of Alphabet, a company just beginning to carve out a niche in artificial intelligence, soared 65% last year. Perhaps one of the clearest signs that Wall Street is bracing for further gains in Alphabet stock is the influx of high-profile institutional investors into the stock.
Let’s take a deeper look at what sets Alphabet apart from its larger peers and evaluate why now is a good time to buy the stock and prepare to hold on to it for the long term.
Image source: Getty Images.
Alphabet generates revenue through a range of different products and services. The company’s crown jewel is its advertising empire, which spans internet platforms Google and YouTube.
The company also has subscription components tied to its streaming service and its consumer electronics unit, Android. Finally, Alphabet began competing in cloud computing with rivals such as Amazon Web Services (AWS) and Microsoft Azure.
The company’s services segment, which includes advertising, subscriptions and devices, is highly profitable. In the first nine months of 2025, Google services achieved an operating profit of 40%. Meanwhile, Google Cloud Platform (GCP) has a profit margin of 21%.
GOOGL Net Profit (TTM) data is provided by YCharts.
Alphabet has been the most profitable AI business among the major hyperscalers on a trailing 12-month basis. The company has slowly and methodically distributed profits into many different areas of the AI value chain. Let’s take a deeper look at how Alphabet quickly evolved from an internet giant to an all-around AI powerhouse.
One of the reasons for the success of Alphabet’s business model is its ability to vertically integrate its various businesses. Vertically integrated companies are able to control many aspects of their own value and supply chain rather than outsourcing their needs.
At the research level, Alphabet has a laboratory called DeepMind to help improve its artificial intelligence model Gemini.
At the computer level, Alphabet is deploying its own custom chip solution, the Tensor Processing Unit (TPU). alphabet partners Broadcom Because of its TPU design. But the bigger idea is that the company has now unlocked new ways to compete with existing cloud infrastructure providers and move away from the full Nvidia GPU stack.
In terms of infrastructure, Alphabet has invested heavily in capital expenditures (capex) over the past three years to build data centers around the world. Its strong profitability allows the company to continue making these infrastructure investments.
Thanks to its $4.7 billion acquisition of Intersect, Alphabet has begun supplementing its data center construction with efficient energy infrastructure. This move will provide Alphabet with flexibility related to energy capacity constraints as AI workloads scale. Therefore, the company does not need to rely as much on external power suppliers.
By building such a diverse ecosystem, Alphabet is paving the way for lower training and inference costs as AI becomes more integrated at the enterprise level. As a result, the company appears well-positioned for a wave of continued revenue acceleration, driven by further margin expansion.
Alphabet is not a company centered around a single product life cycle. What started as a search engine has cleverly evolved into a multi-faceted platform that serves both consumers and businesses. Even a modest investment of $1,000 in the Alphabet IPO is now worth six figures – solidifying the long-term thesis.
GOOGL total return price data is provided by YCharts.
Today, we should view the company through the lens of its artificial intelligence ecosystem—a trend that could be transformative for decades to come.
With artificial intelligence still in its early stages, Alphabet’s trajectory feels like the beginning of a decades-long arc of compounding, market-beating returns. In my opinion, Alphabet is a rare example of a stock worth buying and holding forever.
Before buying Alphabet stock, consider the following factors:
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Adam Spatacco has worked at Alphabet, Amazon, Apple, Meta Platform, Microsoft, Nvidia and Tesla. The Motley Fool owns and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool recommends Broadcom and recommends the following options: Buy $395 Microsoft calls in January 2026, and buy $405 Microsoft calls in January 2026. The Motley Fool has a disclosure policy.
Once-in-a-decade investment opportunity: 1 artificial intelligence (AI) stock to buy in 2026 and hold forever (hint: it’s not Nvidia) Originally published by The Motley Fool
