Tech giants Amazon and Alphabet are reinforcing their competitive positions through substantial investments in artificial intelligence (AI), setting the stage for a potential bull market in 2026. Recently, both companies have reached new stock price highs, bolstered by their trillion-dollar market capitalizations and consistent revenue growth, reinforcing their status as long-term investment options.
Amazon, a dominant force in e-commerce, has seen its stock price soar by 700% over the past decade. Its commitment to AI is transforming operations across various facets of its business, enhancing customer experiences, advertising capabilities, and cloud computing services. The introduction of the Rufus shopping assistant has made it easier for 250 million customers to navigate the online store, resulting in a robust year-over-year sales growth of 10% last quarter on a constant-currency basis.
The company’s innovation extends to its fulfillment centers, where over a million robots have been deployed, significantly reducing operational costs and improving order processing speeds. While its e-commerce segment thrives, most of Amazon’s operating profits stem from growth in cloud services and advertising revenue. Amazon Web Services (AWS) continues to lead in enterprise cloud partnerships with an annual revenue tally of $132 billion. Notably, advertising is now the fastest-growing segment, generating $71 billion in annualized revenue and achieving a 22% growth year on year. This is largely driven by AI technology that enhances ad targeting and analytics, maximizing return on investment for advertisers.
Analysts anticipate that Amazon’s earnings per share will increase at an annualized rate of 18% over the coming years, supported by a diverse range of revenue streams and a stable growth foundation.
On the other hand, Alphabet is experiencing remarkable growth, with its stock appreciating more than double since the lows observed last April. The company is making significant investments in AI infrastructure, which positions it well to enhance services for consumers and businesses alike. Key to Alphabet’s success is its extensive installed user base—encompassing 2 billion users across platforms like Search, YouTube, and Maps—critical for generating advertising revenue.
In the most recent quarter, Alphabet reported a 16% year-over-year increase in revenue, attributing this to investments in chips and data centers. With 300 million paid subscribers to various services, including Google One and YouTube Premium, Alphabet is seeing substantial growth in its service revenue, which rose by 14% year over year.
AI advancements, particularly with the Gemini model, have allowed Alphabet to process an astonishing 1.3 quadrillion data tokens in the third quarter—an increase of 20 times compared to the previous year. This growth not only enhances Google’s services but also supports a burgeoning demand for their cloud services, resulting in a 34% year-over-year growth in cloud revenue, poised at an annualized run rate of $60 billion.
With a reported net income of $124 billion on $385 billion in revenue over the past year, Alphabet is firmly positioned for sustained success, with analysts forecasting an annual earnings growth of approximately 15% in the years ahead. Both companies exemplify the potential of AI to drive long-term value for their shareholders, making them attractive prospects for investors looking for robust growth.
