Alphabet's Gemini generative AI model is among the most used in the world.
Alphabet is developing an internal quantum computing chip to cut out the middleman.
The primary tech investment trend is currently artificial intelligence (AI). All of the AI hyperscalers are dumping billions of dollars into building out AI computing capacity to push the limits of what's possible. We're still in the early innings of learning what AI can do, and it will be some time before there's enough computing capacity available to see AI's full effect.
Another trend that is on the horizon is quantum computing. Quantum computing has the potential to unlock a new level of AI power that we haven't experienced, but this technology is still being proven.
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Combining both of these trends that will play out over the next decade in a single investment option would be ideal, and fortunately for investors, there's a company that is doing that: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Alphabet is heavily investing in both artificial intelligence and quantum computing, and looks like a strong candidate in both of these important and emerging industries.
Image source: Getty Images.
Alphabet is better known as the parent company of Google, although it owns many other businesses. Alphabet has wisely used its impressive cash flows to invest in many other businesses, and this has led to its widespread success today.
In the AI realm, many investors were worried that its cash cow, the Google Search engine, may be replaced by generative AI. However, that isn't panning out, as Google is still retaining a lot of its user base alongside most of the revenue on the platform. In Q2, the Google Search segment delivered 12% year-over-year growth. That doesn't sound like a declining business, and one feature is likely to thank for its continued relevance.
AI search overview incorporates a generative AI summary at the top of each result, combining the form factor of a traditional internet search engine with generative AI. This makes Google Gemini, the large language model behind the feature, one of the most used in the world, which is a huge advantage for training the model.
Furthermore, Gemini consistently ranks among the best-performing generative AI models, making Alphabet a leader in this space. It's also actively pursuing quantum computing technologies, and the combination of its AI leadership and a viable quantum computing chip could make Alphabet an unstoppable business.
Back in December 2024, Alphabet created a mini quantum computing investment rush when it announced that its Willow quantum computing chip had completed a task that would have taken traditional computing methods 10 septillion (10 to the 25th power) years. While this test was specifically created to test quantum computing viability, it still proves that Alphabet is making progress in this area.
Alphabet is developing its own quantum computing chip for one primary reason: It doesn't want to buy computing units from an external provider. To power its AI ambitions, Alphabet buys graphics processing units (GPUs) from Nvidia and custom AI accelerators from Broadcom. Both of these companies are middlemen that drive the price of computing units up. However, if Alphabet can develop its own quantum computer in-house, it can cut the middleman out and be far more profitable.
This makes integrating quantum computing into its existing AI computing infrastructure easier, and also gives Alphabet an advantage in the cloud computing space, as it could rent out quantum computing capabilities.
Time will tell if Alphabet develops a winning approach in the quantum computing realm, but it's already an established leader in the AI world. With nearly unlimited resources compared to some quantum computing pureplays, I'm confident that Alphabet can develop a viable quantum computing chip that boosts its AI capabilities and can be rented out via cloud computing offerings. This makes Alphabet a genius stock pick to bridge the gap between AI and quantum computing, and I think investors can be confident scooping up shares today with the expectation that Alphabet will beat the market over the next decade.
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Keithen Drury has positions in Alphabet, Broadcom, and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.