Alphabet Inc. continues to present itself as a resilient player in the ever-changing market landscape, showcasing remarkable strength amid ongoing concerns about a potential artificial intelligence (AI) bubble. Investors looking for a robust company to hold over the next decade may find Alphabet (GOOG, GOOGL) an exemplary choice due to its fundamental strengths, diverse growth avenues, strong cash flows, and a solid financial standing conducive to future advancements.
The company has effectively harnessed the power of its AI initiatives, particularly through its Gemini family of large language models. By integrating these capabilities, Alphabet has reinforced its core offerings in Search, Google Cloud, and YouTube, simultaneously driving significant free cash flow and fostering a loyal client base. This multifaceted approach allows Alphabet to capitalize on declining costs while diversifying its revenue streams.
What sets Alphabet apart from other players in the AI space is its comprehensive, end-to-end AI platform. The company has secured control over critical elements of the AI value chain, employing custom-designed chips, specialized data centers, and cutting-edge models utilized by billions globally. The integrated nature of this platform enables Alphabet to manage costs as AI usage expands—evidenced by a substantial 78% reduction in serving costs for its Gemini models anticipated by 2025.
The first-party AI solutions, including Gemini, have seen substantial traction in enterprise and developer sectors, processing over 10 billion tokens per minute in the fourth quarter—up from 7 billion tokens in the preceding quarter. In just four months since its launch, Alphabet has successfully sold over 8 million paid licenses for Gemini Enterprise and achieved more than 750 million monthly active users for the Gemini app. The influence of AI extends beyond enterprise solutions, significantly boosting user adoption of consumer services such as Google One and YouTube Premium, which reported over 325 million paid subscriptions at the end of fiscal 2025.
In terms of Google Search, new AI-driven features like AI Mode—acting as a conversational search assistant—and AI Overviews (search summaries) have substantially transformed user interaction. Reports indicate that queries made through AI Mode are now three times longer than traditional searches, with daily usage in the U.S. doubling since its introduction. Notably, around one in six AI Mode queries involves non-text inputs through voice and images, enhancing user engagement and improving targeted advertising, rather than cannibalizing existing traffic.
Google Cloud also remains a vital growth driver for Alphabet. In the fourth quarter, the division experienced a 48% year-over-year revenue boost, reaching $17.7 billion, while operating margins rose by 12.6 percentage points to 30.1%. At the conclusion of fiscal 2025, Google Cloud boasted a backlog of $240 billion, marking a 55% sequential increase. Approximately 75% of Google Cloud clients have engaged with the company’s AI capabilities, and these businesses are utilizing 1.8 times more products than those that do not.
With these compelling growth tailwinds and an operating cash flow of $164.7 billion recorded in fiscal 2025, Alphabet appears to be a strong candidate for investment, presenting a favorable opportunity for those seeking long-term stability and growth in their portfolio.
