This AI Stock Has Everything I Look for in a Long-Term Winner. Here's My Case.

If there were any doubts, they are certainly put to rest by now. Artificial intelligence (AI) stocks have legitimate staying power and appear destined to be one of the biggest long-term drivers in the stock market for the next several years.

Not even a first-quarter swoon in AI stocks has derailed the market rally. The Nasdaq CTA Artificial Intelligence Index, which tracks the performance of companies involved with AI in the tech, industrial, medical, and other economic sectors, is up nearly 40% this year -- with 30% of that gain coming in the last 90 days.

I've been bullish on the tech sector and AI opportunities for several years. And as I look at the sector and seek stocks with a strong growth trajectory that also fit my buy-and-hold philosophy, there's one name that stands out as perhaps the best long-term opportunity in the AI space.

That company is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Here are two reasons why.

1. Alphabet's dominant core business

For everything that Alphabet is involved in -- YouTube, the Android operating system, Waymo robotaxis, and more -- Alphabet's roots are in advertising. And that's the engine that funds Alphabet's AI ambitions.

Alphabet's revenue in the first quarter was $109.89 billion, up 22% from a year ago. And most of that money came directly from advertising.

Data source: Alphabet. YOY = year over year.

In all, Alphabet received 81.5% of its Q1 2026 revenue from advertising sources. In its financial statements, Alphabet includes revenue from Google subscriptions, platforms, and services in its Google Services segment, which is largely made up of advertising. The company reported operating income from that segment of $40.59 billion, which gives it an operating profit margin of 45.2% from Google Services.

There are a few notable reasons for Google's advertising dominance. First, the company has the most widely used search engine and browser on the planet. Google Search had a 90% global market share in April, and its Chrome browser had a 68% market share. Those advantages alone give Google a wide competitive moat.

On top of that, the company is leveraging AI to make its advertising more impactful. The company is deploying Google Gemini, its intelligent assistant and family of AI models, across its ad infrastructure. "This is driving significant improvements across all areas of marketing, and continues to fuel new performance breakthroughs across three areas critical for our customers' success: ads quality, advertiser tools, and new AI user experiences," Chief Business Officer Philipp Schindler said on the recent earnings call.

Through its dominant market share and the company's powerful AI tools -- both in its advertising platform and through its AI Overviews, which are AI-generated summaries that appear at the top of search results -- Alphabet is positioned to maintain its internet advertising stranglehold.

Image source: The Motley Fool.

2. Cloud computing is a big part of the future

Compared to advertising revenue, Alphabet's cloud computing segment is tiny. But don't sell the potential of Google Cloud short, because its rapid growth is drawing a lot of investor and analyst attention.

Google Cloud generated $20.02 billion in revenue in the first quarter, a whopping 63% increase from a year ago. Google Cloud has 14% of the global cloud infrastructure service market, putting it in third place behind Amazon Web Services (28%) and Microsoft Azure (21%).

The segment's operating income was $6.6 billion, tripling from a year ago, and its operating margin improved from 17.8% to 32.9%.

And it appears that the growth in Google Cloud revenue will only accelerate. Alphabet has been making Tensor Processing Units (TPUs), which are chips specifically designed for machine learning and advanced AI workloads. TPUs are Google's in-house alternative to Nvidia's popular, but extremely expensive, graphics processing units (GPUs). And now that it's selling them to other companies, TPUs will be an important revenue source for Google Cloud.

Google Cloud's backlog at the end of the first quarter was $462 billion, nearly doubling on a sequential basis. Management said the rapid increase was fueled by a combination of enterprise AI offerings and the availability of Google's TPUs. Alphabet expects to convert more than half of that backlog to revenue in the next 24 months.

If that's the case, then the $20 billion Google Cloud generated this quarter is going to look like peanuts in just a couple of years.

Alphabet has been a winner so far in 2026

After a slow start to the year, Alphabet stock has really heated up over the last few weeks. The stock is now up 25% on the year and is currently trading less than 3% from its all-time high.

The advertising engine is more powerful than ever, and the company will generate hundreds of billions of dollars over the next two years from its fast-growing Google Cloud business. As I look at rebalancing my portfolio for the second half of the year, I'll be adding Alphabet shares as one of my core AI stocks, and then holding on to them for the long term.

Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.