You Don't Need Polymarket to Make a Winning Bet. Just Buy This AI Stock.

The wealthiest people in the world didn't make their money in prediction markets. Many of them are investors or successful entrepreneurs. If you want to make money, you don't need to bet on the winner of a basketball game; you just need to buy and hold shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), the company behind Google.

Alphabet is capitalizing on artificial intelligence (AI) like no one's business. It's driving strong advertising revenue in search and YouTube, while also seeing growing enterprise demand in Google Cloud. There's tremendous synergy between the two, as the same AI infrastructure (chips and data centers) that's driving higher usage in Google's consumer apps is also powering its enterprise cloud services.

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How Google is making money from AI

AI is fundamental to Alphabet's entire operation. The company says in its annual report that it has 2 billion users across seven products, providing a large customer base to monetize AI tools. Gemini has more than 750 million monthly active users. Google also has 325 million paid subscribers to Google One, which unlocks AI features across Google's apps.

AI is not cheap. Alphabet's 2024 capital expenditures, which help fund its compute resources, more than doubled from 2020 through 2024, reaching $52 billion, according to recent research from The Motley Fool. It jumped to $91 billion in 2025, with the company planning to spend up to $185 billion in 2026.

Building advanced AI models is capital-intensive, but it also creates a high barrier to competitors trying to catch up. Alphabet is one of the few consumer-facing companies that can quickly turn AI spending into revenue through advertising, subscriptions, and cloud services.

Management has found that AI Overviews and AI Mode are leading users to spend more time asking Google questions, which directly affects ad revenue. Search revenue grew 17% year over year in the fourth quarter, accelerating from 12% growth in the same quarter of the previous year.

Google Cloud is where businesses get to test the company's most advanced AI tools, and growth is exploding. Fourth-quarter cloud revenue jumped 48% year over year to $18 billion. It's now a $70 billion annual run rate business for Alphabet, with a backlog of $240 billion.

Build it once, use it everywhere

The main concern on Wall Street is the aggressive capital spending. That's understandable, since the growing capital expenditures have pressured free cash flow. The stock is up 220% over the past three years, yet free cash flow has increased only 18% over that period.

But the increasing engagement it's seeing in Search suggests these expenditures could be widening the company's competitive moat, and it could lead to a big payoff over time. During the fourth-quarter earnings call, management noted that Gemini's serving unit costs dropped by 78%, indicating that it's becoming more efficient.

Google is one of the most widely recognized brands, and Alphabet's AI leadership makes it a more certain bet than a prediction market. Its forward price-to-earnings ratio of 26 still looks reasonable, with analysts modeling the company's earnings growth at 15% annually over the next several years. Assuming the stock trades at the same earnings multiple, that's enough growth to double the share price in five years.

John Ballard 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.