1 Overlooked AI Monster

Most investors think they need to hunt down small, speculative companies to ride the artificial intelligence wave. But the truth is, one of the best AI plays has been sitting in plain sight all along, Alphabet.

AI is here to stay, and Alphabet may be the most complete way to gain exposure.

Key Points

• Alphabet builds chips, runs cloud AI, and embeds it in apps used by billions.

• Growth still strong thanks to Search, YouTube, and even Waymo are expanding despite AI competition.

• It’s cheap for its size and trading at ~22x earnings, below peers, with 11–14% growth ahead.

Alphabet’s AI Reach Is From Chips to Consumers

What sets Alphabet apart is that it touches every layer of the AI economy. At the infrastructure level, the it designs its own Tensor Processing Units (TPUs) and recently introduced the Ironwood TPU and Axion CPU to handle massive AI workloads.

In fact, management raised its capital spending target for this year to about $85 billion as demand for AI infrastructure surges.

At the platform level, Google Cloud is booming. Last quarter’s sales climbed 32% year over year, and operating margins mushroomed past 20%.

Nearly every generative AI unicorn, according to Sundar Pichai, is building on Google Cloud. And even rivals are buying in with reports suggesting Meta inked a six-year, $10 billion deal to run workloads on Google Cloud.

At the application level, billions of people use Search, YouTube, Android, Gmail, Maps, Chrome, and AI is increasingly embedded across them.

AI Overviews already serve more than 2 billion monthly users, driving higher query volume. The new AI Mode in Search has passed 100 million monthly actives in just two markets.

And the Gemini app has grown to 450 million monthly actives, helping Alphabet process a staggering 980 trillion tokens per month.

Even businesses outside the spotlight are gaining traction. Waymo, Alphabet’s self-driving unit, is now completing over 250,000 paid rides per week, a number that could eventually make autonomy a meaningful contributor.

The Search “Threat” Is Overstated

One of the big bear cases on Alphabet is that AI might undermine Google Search, the crown jewel. But the latest results suggest the opposite, and that Search revenue jumped 12% last quarter, as AI features actually boosted engagement.

Younger users, in particular, are spending more time on Google products thanks to tools like Circle to Search and Lens.

Meanwhile, YouTube continues to dominate thanks to Shorts’ monetization per watch hour that already matches or in some countries exceeds that of traditional in-stream ads.

The Numbers Tell the Story

Alphabet’s scale is staggering, but the financials show it’s still growing fast:

• Last quarter, sales of $96.4 billion, up 14% year over year.
• Operating margin: ~32%.
• Earnings per share were $2.31, up 22% from last year.
• Plus, $13.6 billion in buybacks and a $2.5 billion dividend in the quarter.

And despite that strength, Alphabet trades at a price-to-earnings ratio of about 22x, cheaper than the S&P 500 average and by far the least expensive of the so-called Magnificent Seven.

Analysts expect earnings at 14.3% annually through 2027 and that outlook doesn’t even fully capture potential upside from Cloud’s backlog, Waymo’s growth, or more AI monetization.

What’s Next?

Alphabet is a vertically integrated AI powerhouse with a presence at every level of the stack. From the chips powering AI models, to the cloud where those models are trained, to the apps that billions of people interact with daily, Alphabet is arguably the most complete AI investment in the market.

And with a valuation that still lags peers, the setup looks unusually attractive. For investors looking for durable exposure to AI without betting the farm on unproven players, Alphabet is the obvious answer hiding in plain sight.