Google Stock: Is AI Growth Real or Not? Investors Shocked as Alphabet Skyrockets Past $3 Trillion

It's a milestone that few companies ever reach. After a massive 30 per cent surge since its last earnings report in July, Alphabet (NASDAQ: GOOG, NASDAQ: GOOGL) recently smashed through the $3 trillion valuation mark for the first time, solidifying its place as the world's fourth-largest company with its market cap hitting $3.1 trillion. For a company of this immense scale, such a monstrous move is staggering.

The rally was fuelled by a wave of good news, including a favourable court ruling and resilient growth in its core business. But after such a historic run-up, investors are now asking the crucial question: is it too late to get in on the action?

With the company set to report its third-quarter earnings on 29 October, many analysts believe the stock's momentum is far from over. Here are three key reasons why Alphabet stock could be a smart buy before its next big announcement.

The Unstoppable Search Engine Driving Alphabet Stock

For much of 2025, the narrative was that Google Search was in trouble, threatened by the rise of generative AI competition. The reality, however, has been the complete opposite. Google's core advertising business has proven incredibly resilient, with revenue growing at a solid 12 per cent pace in the second quarter.

Alphabet has successfully defended its turf by deeply integrating AI into its search experience. Features like AI Overviews are now standard, creating a hybrid model that combines traditional search with AI-powered answers. Crucially, management has confirmed that these AI-powered searches monetise at about the same rate as standard ones.

This success is built on a nearly unbreachable 'wide moat'. Alphabet owns both the world's most popular browser, Chrome, and the top smartphone operating system, Android, each boasting over 70 per cent market share. This makes Google the default search engine for the majority of people on earth, a dominance further cemented by a lucrative revenue-sharing deal with to be the default on its devices.

Google Cloud: The High-Growth Engine Powering Alphabet Stock

Beyond its advertising empire, Alphabet's biggest growth engine is now Google Cloud. The division is firing on all cylinders, with revenue climbing an impressive 32 per cent to $13.6 billion last quarter, while its operating income more than doubled to $2.8 billion.

The demand for its cloud and AI services has been so strong that Alphabet recently raised its capital expenditure budget for the year from $75 billion to $85 billion to expand its data centre capacity. This growth is powered by major client wins, including partnerships with AI leaders like OpenAI and ().

Alphabet's strength comes from its vertically integrated model. It is the only major cloud provider that also develops its own leading AI models (Gemini), custom AI chips, and owns its own fibre network to ensure speed and low latency. This gives the company a significant cost and performance advantage that continues to attract top-tier clients.

The 'Moonshots' That Add Value to Alphabet Stock

While Search and Cloud drive today's profits, Alphabet's portfolio of emerging 'moonshot' businesses adds a layer of massive future potential. Its Waymo robotaxi business is already operating in several U.S. cities (including Phoenix, San Francisco, and Los Angeles) and is expanding rapidly. If Alphabet can scale this business and reduce costs, it could become a colossal growth driver in the coming decade

Furthermore, its quantum computing division is making real progress with its Willow quantum chip, showing significant advances in reducing error rates, one of the biggest hurdles in the field. Together, these long-term bets provide a level of future optionality that few other companies can match.

Despite all this innovation and market dominance, the stock still trades at an attractive valuation. With a forward price-to-earnings (P/E) ratio of less than 24, it remains cheaper than most of its megacap AI peers. This combination of a dominant present, a high-growth near future, and world-changing long-term potential makes Alphabet a compelling stock to consider, especially with its next earnings report just around the corner.

So, is the AI growth real? Based on the evidence, the answer is a resounding yes. From reinvigorating its core search business to powering its cloud division and fueling its long-term moonshots, AI is not just a buzzword for Alphabet; it is a fundamental driver of its current success and future potential. For investors, the combination of a wide competitive moat, explosive growth engines, and a reasonable valuation presents a powerful case.