Important points
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Alphabet competes with Google Gemini on the software side of the industry and with TPUs on the hardware side.
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The company continues to maintain an excellent financial position.
Following the recent sell-off in artificial intelligence (AI) stocks, it’s starting to look like the hype behind the technology is starting to fade.
That’s bad news for smaller startups in the space, which still rely on large amounts of investor funding. But it’s good news for investors and big companies involved in AI.
Will AI create the world’s first millionaire? Our team published a report on one little-known company called an “essential monopoly” that provides critical technology needed by both Nvidia and Intel. Continued “
Investors benefit if AI stocks fall to more reasonable levels. And for large companies, alphabet (NASDAQ:GOOG)(NASDAQ:Google)anything that pushes out smaller competitors can be a good thing.
Alphabet is a huge company, but its stock price has fallen over the past month. I think this is the only AI stock among the “Magnificent Seven” worth buying right now.
Image source: Getty Images.
spell it out
After all, Alphabet is Google’s parent company, and you’ve probably interacted with its website recently.
It is also the most successful of the Magnificent Seven in developing its own AI technology. Google Gemini has been steadily absorbing market share in the enterprise large-scale language model (LLM) market since 2023.
In 2023, OpenAI, the developer of ChatGPT, had a 50% share of that market. Currently, Google’s share has fallen to an estimated 27%, but over the same period Google’s share has increased from 7% to 21%. And if last year’s trends continue, Google will overtake ChatGPT this year.
On the other hand, the members of Alphabet’s “Magnificent Seven” are meta platform The company’s share of the enterprise LLM market declined from 16% in 2023 to 8% by the end of 2025. Additionally, Anthropic, the current market leader in the enterprise LLM space, has an estimated 40% market share and plans to expand its use of Alphabet’s hardware in the future.
Another member of the Magnificent Seven is applepartnered with Alphabet earlier this year to develop its own AI product using Google Gemini’s model.
That means Alphabet has already beaten one of its peers in AI software, and another of the Magnificent Seven relies on its AI software. Then it’s about how to deal with other things.
everything is lined up
Co-developed with Alphabet’s Tensor Processing Unit (TPU) broadcom, Becomes a serious rival to the Magnificent Seven Nvidiagraphics processing unit (GPU).
Note that all other Magnificent Seven stocks use Nvidia hardware to run their AI to some degree. Amazon and microsoftboth make extensive use of Nvidia GPUs.
While it’s stuck buying all its hardware from Nvidia, Alphabet is moving toward using its own hardware, and several other AI companies are starting to use TPUs as well. Anthropic plans to spend tens of billions of dollars this year to add 1 gigawatt of TPU chips to its computing power.
Therefore, except for the following: tesla and NetflixAlphabet either has competitors for the Magnificent Seven’s AI products (whether hardware or software) or, like Apple, uses Google AI in its own products.
Google has basically established itself as a key player in the AI industry. And unlike AI startups like Anthropic and OpenAI, the company has many revenue streams beyond AI, and it’s been a long time since Alphabet relied entirely on investor funding, so a drop in stock price won’t hurt it.
Alphabet’s 2025 sales will increase 15% from 2024, exceeding $400 billion for the first time. The company also saw its diluted earnings per share (EPS) jump 34% over the same period. Alphabet has a net profit margin of 32.8% and a very healthy debt-to-equity ratio of 0.14.
All of this makes Alphabet a standout among the Magnificent Seven as far as AI is concerned.
Should you buy Alphabet stock now?
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James Hires holds a position at Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla, and shorts Apple stock. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
