Google company profile
Zacks Rank #3 (Hold) Stock alphabet (google) is one of the most innovative companies in the modern technology era. Over the past few years, the company has evolved from being primarily a search engine provider to cloud computing, ad-based video and music streaming, self-driving cars, healthcare, and more. In the online search field, Google occupies a dominant position with approximately 90% of online search volume and market share. Over the years, the company has witnessed an increase in search queries, primarily due to continued growth in user adoption and usage on mobile devices, continued growth in advertiser activity, and improvements in ad formats.
Fears of AI cannibalism become exaggerated
Alphabet's dominant search market share and growing cloud footprint are key growth drivers for the company. Initially, Google's AI efforts got off to a shaky start. For example, Google's first version of an AI model called “Bard” often resulted in completely inaccurate searches. Meanwhile, ChatGPT and other models seemed to be running away in the AI race. But after several iterations, Google's Gemini 2.5 AI has the fastest response in the industry and is considered the industry standard. Meanwhile, investors' concerns about cannibalization of the search business are unfounded. In fact, Google's own hybrid AI search model is gaining popularity among younger users. The Gemini model is rapidly being incorporated across Search, YouTube, Android, and Workspaces to improve the user experience and drive internal productivity (coding, customer service, etc.).
Google's revolutionary TPU
Google has built its own chip to power its AI bots. Google's Tensor Processing Units (TPUs) are custom-designed application-specific integrated circuits (ASICs) built to dramatically speed up machine learning (ML) tasks, particularly large-scale training and inference for models like Google's Gemini, which powers things like search and photography, and are available via Google Cloud and serve as a core component of Google's AI hypercomputing system. The TPU board fits in the same slot as a hard drive in the huge hardware racks in the data centers that power Google's online services, the company said, adding that its chips are “an order of magnitude more optimized for machine learning performance per watt” than other hardware options. TPUs are tailored for machine learning applications, making the chip more tolerant of reduced computational accuracy and requiring fewer transistors per operation. ”
Google Gloud: A consistent growth engine
Alphabet is rapidly growing in the booming cloud computing market. Google Cloud's revenue for the third quarter of 2025 was $15.16 billion, an increase of 33.5% year over year. Google's growing investments in infrastructure, security, data management, analytics, and AI are positive. Google is expanding its cloud footprint around the world through strategic partnerships, acquisitions, and an increasing number of data centers. Alphabet benefits from its partnership with. Nvidia (NVDA) In the clouds. Google Cloud was the first cloud provider to offer NVIDIA's B200 and GB200 Blackwell GPUs, and will also offer the next generation of Vera Rubin GPUs. The introduction of 2.5 Flash, Imagen 3, and Veo 2 are notable developments. Google Cloud is becoming the preferred choice for enterprises planning to deploy AI agents, thanks to its agent development kit and low-code agent designer tools.
Advertising business and YouTube drive revenue growth
AI improves ad targeting and effectiveness, making core businesses more resilient and profitable in the face of AI challengers. Meanwhile, YouTube continues to do very well, serving as another strong pillar of revenue growth (especially on the short-form video side). The Zacks Consensus Estimate is projecting double-digit sales growth for the full year 2026.
Future Growth: Waymo Robotaxis
Waymo completes more than 450,000 paid robo-taxi rides per week across its operating regions, including Phoenix, Los Angeles, San Francisco and Austin. The late 2025 report has a goal of reaching 1 million rides per week by late 2026, a significant increase from earlier this year. Tesla (TSLA) is poised to win the robotaxi race in terms of scale and cost, but there won't be one winner-take-all, and Waymo will likely own a significant portion of the battle.
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Berkshire Hathaway acquires Alphabet
Warren Buffett's Berkshire Hathaway recently made a big surprise investment to buy a $4.3 billion stake in Google's parent company Alphabet in Q3 2025, making it a big tech bet for value investors, likely driven by Alphabet's strong market power in search, its lucrative advertising network, and the promise of AI, despite Buffett's usual tech hesitations.
GOOGL's evaluation is reasonable
Google consistently has the lowest P/E ratio of the Mag 7 stocks. A P/E ratio of 30x EPS is affordable, so it's no wonder Buffett wants it. Additionally, the company has about $100 billion in cash, but only $20 billion in debt. Our strong cash balance provides us with the flexibility we need to pursue any growth strategy, whether through acquisition or otherwise.
strong trends and technicals
GOOGL stock has outperformed the general market index and has been on a step-wise upward trend throughout the year. Investors can use the intermediate 10-week moving average as a guide to the trend.
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conclusion
Alphabet continues to be one of the most strategically positioned companies in technology, combining overwhelming search economics, accelerating cloud momentum, and expanding AI-driven fundamentals.
This article originally appeared on Zacks Investment Research (zacks.com).
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