Google Stock Outlook: Alphabet’s Bets on SpaceX and Quantum Computing Matter for Investors

TradingKey - Investors who look at the Google stock price seem to focus on Search, Ads, and Cloud. These are still the cash cows, but there are now three bets on upstream technology that drive the long-term case for Alphabet Inc. (GOOGL) (GOOG). These areas—Space Infrastructure, AI-Specific Chips, and Quantum Computing—are not side projects. They relate to how Alphabet reduces cost, buys unique-scale capacity, and prepares itself for the future of compute. Knowing these allows you to decide whether Google stock is priced only for today’s profits or also for tomorrow’s platforms.

Will Google's TPUs Replace Nvidia’s GPUs?

The economic aspects of AI are undergoing fundamental changes, and the focus has moved to the cost per inference at scale. Recent data shows Google cut inference cost per token by ~70% moving from TPU v6 to v7, bringing many workloads closer to parity with Nvidia (NVDA) GB200 NVL72. Even though this isn't an attempt to challenge Nvidia’s level of sales or the speed at which it produces new products (with examples being the GB300 and potentially even larger rack-based alternative Vera Rubin NVL144 features), it does change the scope of competition. Specifically, the primary competition will be “who can maintain its level of performance at the highest efficiency over an indefinite time span” as opposed to simply “who can provide the fastest training response.”

The development of the TPU is a system-level design problem rather than a single technology jump. Interconnects, HBM, advanced packaging, and rack efficiency are all involved. Because inference is a long-term cost center, that work nets up into better gross margins for AI products. Alphabet already employs TPUs to train and serve Gemini. With more external customers developing TPU-based solutions and maturing their software, there is an increasing level of demand for cost-optimized inference. Additionally, the trend seen from top model companies looking to obtain their own custom silicon through companies like Broadcom Inc. (AVGO) is another indicator of a growing share of the ASIC-style accelerator for predictable at-scale inference across the industry.

For Google stock, the implications are quite clear—continuing to reduce its cost to produce inference while maintaining high utilization rates will provide Alphabet the ability to maintain a favorable growth rate for its AI services due to the reduced burden on unit economics, as well as provide more sustainable pricing with more consistent margins through Google Cloud, in addition to providing a more viable stream of revenue from AI functionality added to Search, Workspace, YouTube, and Android. Lastly, larger scale growth of AI services through Google will also help to assuage the risks associated with being displaced by the tightness of GPU supply or pricing cycles that have historically existed.

Google's Investment In SpaceX

SpaceX was invested in by Alphabet through its Google side, with these investments made in 2015, when Google and Fidelity reportedly invested $1 billion in the company. Based on market valuations and other financing activities of SpaceX that occurred subsequent to this investment, Alphabet’s ownership stake in SpaceX continues to be significant even after many years have passed since the investment was completed. In early 2025, Alphabet recorded a substantial unrealized investment gain related to a SpaceX valuation update. Market speculation has included potential IPOs since then. Such consequences are unknowable but the trajectory is clear: the SpaceX holding is a significant, if volatile asset that might not be adequately reflected in the traditional multiples on Alphabet’s core business.

The strategic consideration is as important as the mark-to-market implications. Starlink ground stations are located in Google Cloud data centers, while Alphabet has an interest in developing its own space-based infrastructure. Project Suncatcher is built to demonstrate that data centers in space powered by abundant solar energy and connected by laser communications could be free from the limitations of terrestrial electricity and cooling.

Alphabet appears to be preparing for many different ways for information to be transmitted from orbit to the Earth—the interaction of Alphabet with laser link technology (such as the business it is creating with Aalyria) is an indication of this.

If you are interested in investing in Google's stock, the return on investment will make sense. As SpaceX continues to grow, Alphabet remains a part of that growth with its investment. If geospatial networking (or orbital compute) ends up creating its own competition, Alphabet is not beholden to a single provider, as it is building pieces of the stack itself. That two-pronged strategy provides financial and operational leverage that separates Alphabet from other major tech companies. It also adds a range of circumstances under which Alphabet will be able to obtain high-end capacity for AI and cloud without relying exclusively on expansion on the ground.

Alphabet’s Willow And “Quantum Echo”

Alphabet's quantum program has progressed from initial experimental demonstrations towards reported performance metrics. In addition to the Sycamore experiment conducted in 2019, which showcased the Willow quantum processor and a novel technique for conducting quantum echo information processing, Alphabet's processor has an anticipated speed advantage of 13,000 times versus available classical computing-based supercomputers for certain problem types. Verification and reproducibility through independent external assessment are ultimately required for support of this claim as well as reliable evaluations for ongoing refinements as the technology matures.

Alphabet has a unique full-stack development approach to quantum computing. At its campus dedicated to quantum artificial intelligence (AI), Alphabet integrates fabrication with QA testing and data-center-scale infrastructure, thereby allowing faster iteration and harmonization between hardware and software, and mitigation of errors in quantum computing development. Although this will not generate near-term revenues, the time frame for commercial utility of Fault-Tolerant Quantum Computing technology is still undefined until such time as a meaningful quantum advantage is achieved in relation to chemistry, optimization, and/or cryptography-based workloads. Companies that have already established themselves as leaders in this sector—with respect to controlling the physical roadmap for hardware and developing error correction techniques—will realize the maximum value from quantum computing.

For those who track Google stock prices as an investor, quantum can be looked at as an option that is contained within Alphabet versus being the primary driver of growth. Because if Alphabet can successfully convert its research advantages into actual services offered on Google Cloud, then there will be an asymmetrical upside potential. Most of the risk with quantum relates to timing and execution, not strain on Alphabet's balance sheet.

Why Are These 3 Pillars Important for Google?

Alphabet has established a strong financial and operational position by having its infrastructure connected to data centers that are outside of Earth's atmosphere. With the development of TPU v7, Alphabet is taking significant steps to decrease costs related to AI scaling, providing more reliability for its customers as usage increases. With its ongoing investment in quantum computing, Alphabet is giving itself the ability to create longer-term investment opportunities where value does not need to be created immediately for success. All of these "Pillars" are working together to allow Alphabet’s advertising and cloud businesses to benefit from having competitive advantages, helping them continue to grow despite increased competition.

None of this suggests that Alphabet’s stock price will move in a direct or linear fashion. Nvidia has set a high standard for AI hardware and software, regulatory environments can change, and timelines for quantum computing advancement often take longer than expected. But when considering Alphabet's potential, it is essential to look not only at its current cash flows but also at Alphabet's ability to invest in large quantities of computing power for monetization over the next ten-plus years. These three pillars of investment must be taken into account. These pillars will show you the value you are purchasing: the value of having all computing resources integrated, having low costs associated with how you use those resources, and having the ability to perform at a high level over long periods of time, which will ultimately help sustain its valuation through many technology cycles.