Alphabet generates substantial net income right now, which makes it easier to tap into new AI opportunities.
Google Search and YouTube ads continue to drive meaningful revenue growth for the company.
Google Cloud revenue continues to accelerate as enterprise AI demand heats up, while Gemini and Waymo are gaining momentum.
Artificial intelligence (AI) stocks have produced some of the most compelling returns in the stock market this year. However, those stocks also come with volatility, which can cause anxiety for people who want to buy only stocks they can forget about for a decade.
That "buy and forget for a decade" approach is part of the preferred investing style of renowned investor Warren Buffett; investors who want AI stocks that match Buffett's approach may want to give Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) a closer look. It's the type of stock that's much easier to buy and hold for a decade than a high-risk, unprofitable company that is hot right now.
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While smaller AI companies have high revenue growth but burn through money, Alphabet delivers healthy profits while expanding in key markets. It reported almost $130 billion in operating income in 2025 and started 2026 strong with $39.7 billion in operating income, which was a 29.7% year-over-year improvement.
Alphabet is best-known for Google Search and YouTube. These two websites continue to attract billions of users each year while delivering high-margin online advertisements. Google Services revenue increased by 16% year over year, showing that this segment is still growing.
Google Cloud stole the show in Alphabet's Q1 2026 earnings, with a 63% year-over-year growth rate. Google Cloud has become a vital part of enterprise AI infrastructure, and its accelerated growth rate is a clear example of Alphabet generating a positive ROI from its AI investments. Overall revenue was up 22% year over year.
Google Search, YouTube, and Google Cloud are the main revenue drivers, but Alphabet is tapping into exciting opportunities that could translate into meaningful revenue growth in future quarters.
Gemini has already been well-received as Google's AI model. Gemini Enterprise experienced 40% sequential growth in the number of paid monthly active users, once again showing a real connection between AI investments and additional revenue.
Waymo is another exciting AI start-up that is within Alphabet's corporate profile. Alphabet's Q1 press release touted Waymo's achievement of surpassing 500,000 fully autonomous rides per week. Self-driving vehicles could transform transportation and become a meaningful revenue compounder once autonomous rides become more mainstream.
When Alphabet embraces a new AI opportunity, there isn't much worry about whether Alphabet will go bankrupt or never realize a profit. The company is loaded with cash, especially after an $84.75 billion equity capital raise designed to expand AI infrastructure and compute.
To top it all off, Alphabet still has a compelling valuation. Its price-to-earnings (P/E) ratio of 25.5 is lower than the S&P 500's, despite Alphabet growing faster than most of the companies in the famed index. Alphabet shares are down by almost 20% from all-time highs, and this dip has created a tremendous buying opportunity for investors who want to hold the stock for the next 10 years.
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Marc Guberti 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.