With the market’s recent pullback, many investors are likely looking for blue-chip stocks trading at discounts on their watchlists. While some big technology companies have been hurt recently by concerns over huge infrastructure spending, one company stands out as a particularly attractive opportunity. alphabet (GOOG 0.98%)(Google 1.00%).
The search giant’s stock price has cooled, falling from recent highs of around $350 to around $306 as of this writing. But even though growth stocks have taken a breather recently, the underlying business has been very strong.
The company benefits from artificial intelligence (AI) directly through its enterprise cloud business and indirectly across its vast consumer ecosystem. Here’s why Alphabet is my top pick for investors looking for resilient AI stocks to buy today.
Image source: Getty Images.
Fast-growing, profitable cloud business
When investors think of Alphabet, they often think of digital advertising. However, the company’s cloud computing business, Google Cloud, is rapidly becoming the main player.
Underscoring the company’s underlying momentum, Alphabet’s fourth-quarter revenue rose 18% year over year to $113.8 billion. This revenue acceleration was driven by Google Cloud’s impressive 48% year-over-year revenue growth of $17.7 billion.
Additionally, this cloud revenue flows nicely into Alphabet’s bottom line.
Google Cloud’s operating profit more than doubled from the same period last year to $5.3 billion. Additionally, the segment’s operating margin expanded to 30.1% in the fourth quarter from 17.5% in the year-ago period. This segment profit expansion suggests that Google Cloud has finally achieved the scale necessary to meaningfully drive Alphabet’s consolidated revenues, rather than simply subsidizing sales.
And that momentum is well supported by a growing backlog. Capturing the unique predictability of enterprise demand, Google Cloud ended 2025 with a massive $240 billion backlog, up 55% sequentially.
Adding context to the sector’s incredible growth, especially with large customers, CEO Sundar Pichai said on Alphabet’s fourth-quarter earnings call that “the number of deals of $1 billion or more in 2025 exceeded the previous three years combined.”
Efficiency across the AI ecosystem
Beyond enterprise cloud agreements, Alphabet is actively incorporating AI into products that billions of consumers use every day. AI powers products across Alphabet’s core search business, YouTube, and Google Workspace.
That being said, moving to an AI-first world is incredibly expensive.
Alphabet’s capital expenditures, or spending on physical assets such as data centers and servers, totaled $91.4 billion in 2025. And management expects 2026 capital expenditures to be in the range of $175 billion to $185 billion.
Such a sharp increase in spending can make investors nervous about a company’s future free cash flow, or operating cash flow minus capital expenditures.
But Alphabet is getting smarter about how it deploys this technology. The company is actively leveraging AI to improve the engineering efficiency of its employees and is constantly looking for ways to improve data center efficiency.
“Through model optimization, efficiency, and utilization improvements, we were able to reduce Gemini’s cost-per-service by 78% compared to 2025,” Pichai explained on the conference call.
Priced based on reality, not perfection
Of course, there’s a reason why stock prices have fallen recently. Wall Street is concerned that heavy investments in AI will squeeze profit margins in the short term.
However, at today’s prices, the market appears to have fully factored in these risks. As of this writing, Alphabet’s price-to-earnings ratio is approximately 28 times. This isn’t a cheap valuation, but it’s certainly an attractive one given the recent momentum in Alphabet’s business.
That being said, there are scenarios where the stock could go wrong from here. The biggest risk is that large investments in cloud computing will not yield sufficient returns. However, another key risk is the company’s heavy reliance on advertising, which could suffer in a weak macroeconomic environment.
But ultimately, I believe Alphabet offers one of the most balanced risk-reward profiles among AI stocks today. The company has a diversified and well-funded business, with a rapidly accelerating cloud focus.
If you’re looking to buy dip, I think this is a great place to start. Of course, this doesn’t mean this is the bottom. Stock prices may fall further. However, I believe the stock will perform well over the long term from here.
