Why Alphabet Stock Just Popped
Key Points
Google released Gemini 3 Pro last week.
Analysts and users are raving over the new LLM, and comparing it favorably to ChatGPT.
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The stock market is starting strong this holiday-shortened week, with the S&P 500 up more than 1% -- and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is helping with that.
Shares of the tech titan gained 6% through 10:40 a.m. ET after Google released its Gemini 3 artificial intelligence model last week, sparking positive reviews -- and an analyst upgrade.
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Image source: Getty Images.
Introducing Gemini 3
Melius Research analyst Ben Reitzes says Gemini 3 Pro is the "most important" AI news out there right now, and threatens to shake up the AI race. "Gemini 3 topped benchmarks for coding, tool use, math, science, and multimodal reasoning," reports Investing.com today, crediting Alphabet's homebrewed Tensor Processing Unit (TPU) chips -- so called because they are based on multi-dimensional "tensor" arrays of numbers for the advances.
Salesforce CEO Marc Benioff tweets: "I've used ChatGPT every day for 3 years. Just spent 2 hours on Gemini 3. I'm not going back," exulting that "the leap is insane -- reasoning, speed, images, video ... everything is sharper and faster. It feels like the world just changed, again."
And investment bank BNP Paribas has just initiated coverage of Alphabet stock with an "outperform" rating and a $355 price target.
Is Alphabet stock a buy?
This is not good news for everyone. Sam Altman at OpenAI is reportedly warning of "temporary economic headwinds" as Gemini gains ground on ChatGPT. But Alphabet stock appears to have gotten a second wind.
Am I tempted to buy Alphabet stock? Sure, I am. Still, things change quickly in the AI space. Alphabet stock, trading at 30 times earnings with a projected 15% growth rate, still seems pricey. And with its free cash flow at only $73.5 billion currently -- less than 60% of reported net income -- I worry Alphabet may be even more expensive than it looks.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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