We recently published 10 Stocks Everyone’s Talking About As AI Investments Continue. Alphabet Inc (NASDAQ:GOOG) is one of the stocks analysts were recently talking about.
Wall Street analysts have long been calling Alphabet Inc (NASDAQ:GOOG) an undervalued AI play. However, the stock seemed to be under the influence of two key overhangs: AI-related threats to Google search and antitrust proceedings against the company. But with the recent court ruling largely in favor of the company, the stock is rising, and many believe it has more room to run.
We recently surveyed some of the most popular discussion boards on Reddit to see what retail investors are buying. One of the most popular stocks Redditors are buying these days is Alphabet Inc (NASDAQ:GOOG). Our research is based on investing-related discussions on subreddits like r/Investing and r/Stocks.
Google has an edge over competitors because it’s easier for the billions of users of its search engine to switch to Gemini instead of opting for a completely new model. Google has over 1.5 billion monthly users interacting with its AI-powered Search overviews. OpenAI, Alphabet’s biggest competitor now when it comes to AI search, has less than 5% of its users paying, and its business model is still developing. Google’s first-quarter results showed continued strength in its cloud unit, with revenue up 28% year over year and solid operating income growth. This supports Google’s broader AI strategy and underscores the scale advantages of its cloud business.
Lakehouse Global Growth Fund stated the following regarding Alphabet Inc. (NASDAQ:GOOG) in its second quarter 2025 investor letter:
“We’ll wrap things up with Alphabet Inc. (NASDAQ:GOOG) , which in similar fashion to Hemnet, only experienced a marginal share price decline over the year. That said, Alphabet did meaningfully underperform our average portfolio return as concerns that it’s near monopolistic position in Search (which generates the majority of their advertising revenue) could be eroded by new Artificial Intelligence (AI) alternatives like ChatGPT and Perplexity. When it comes to the potential risks AI poses to the dominance of search, our view is a balanced one. No doubt uncertainty has increased but we believe Alphabet remains well positioned through its massive user distribution (9 products with over 1 billion users each) and long-standing investments and leadership in AI (DeepMind and Google Brain).
Alphabet is innovating fast and has already successfully rolled out their own AI powered search function, AI Overviews. To date, engagement has been encouraging with consumers searching more frequently, with more detailed queries and clicking through at higher rates. Management has noted that AI Overviews are monetising at the same rate as regular Search ads and, that as of April, AI Overviews had already reached 1.5 billion monthly users. This is a much larger base than ChatGPT and highlights the inherent distribution advantage Alphabet has by being able to directly integrate AI Overviews into the widely used Google Search engine.
Looking at current fundamentals, business momentum continues to be strong with revenue growing 12% year-over-year (14% constant currency) in the most recent quarter. This was driven by double-digit growth across Search, YouTube advertising, subscription platforms, and Google Cloud. Cost discipline efforts are also improving profitability, and operating margins have expanded steadily to 32.6%, up from 25.6% two years ago. With a relatively undemanding valuation of less than 20x forward earnings, we still believe the risk/reward for Alphabet is attractive. That said, it would be remiss not to acknowledge that the future dominance of Search is less certain today than it was a few years ago as the range of potential outcomes has widened. As such, we rightsized our position on strength earlier this year.”
While we acknowledge the risk and potential of GOOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOG and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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