Forget D-Wave Quantum: This AI Behemoth Still Has More Room to Run

D-Wave Quantum (NYSE: QBTS) has been turning heads in the technology world in recent quarters as it progresses in the high-potential industry of quantum computing. This pure-play quantum company is present in both the quantum annealing and gate-model space -- annealing helps customers optimize operations, while gate-model systems are more general-purpose.

The company has been generating revenue in the annealing space, but like all quantum players, it's still in the early days of its growth story. This is because quantum computers are still a work in progress, and it may take years for them to reach general usefulness. Meanwhile, investors have aimed to get in on this story early, driving D-Wave stock up in the quadruple digits over the past three years.

This long time to market, as well as the massive gains we've seen in the stock price, mean you may want to forget about rushing into D-Wave right now -- and instead turn to the following artificial intelligence (AI) company that's generating billions of dollars in earnings. This AI behemoth still has more room to run. Let's check it out.

Image source: Getty Images.

A name that may be very familiar

The stock I'm talking about may be a very familiar name to you, but you might not immediately link it to AI. Instead, you might associate it with something you do every day: search on the internet.

This company is Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), owner of the Google platform, including Search and Chrome. Google has long been the world's top search engine, with 90% market share. And this has been the company's key to enormous levels of revenue -- thanks to advertising. Advertisers turn to the Google platform, where they know we spend a lot of time, to promote their products and services.

Meanwhile, Alphabet has a second major revenue source, and that's cloud computing -- and here's where we get to the AI story. Google Cloud offers customers a wide range of solutions to help them build AI and apply the technology to their operations. This business already was growing prior to the AI boom -- its services reach well beyond AI -- but the emergence of this newish technology has offered the business an extra boost.

A $100 billion quarter

For example, in the recent quarter, demand for infrastructure and generative AI helped Google Cloud revenue jump 34% to $15 billion. And Alphabet's overall revenue soared past $100 billion for the first time ever in a single quarter.

Alphabet is winning in AI in two distinct ways. The company has built its own large language model, Gemini, that it's applying to its own business -- for example, to improve the advertising experience across Google and to improve Google Search results. This may prompt advertisers to spend more here over the long run.

And, as mentioned, Alphabet offers AI tools to its cloud customers, and this already is generating spectacular growth.

The early stages of AI

There's reason to believe that this AI revenue engine could power earnings higher for quite some time. This is because we're still in the early stages of AI, a time when companies are training models and looking for capacity for AI workloads. This should continue, and we also should see more and more players reaching the stage of applying AI to real-world problems. As these AI systems work, they need chips, networking tools, and the cloud -- meaning the demand for Google Cloud's offerings should continue throughout the AI story.

In fact, Alphabet may see growth opportunities increase as the use of AI broadens across industries and new areas such as robotics reach advanced stages of development. All of this suggests that AI could supercharge Alphabet's earnings in the quarters and years to come.

But what about the stock price? Today, Alphabet shares trade for 29x forward earnings estimates, a reasonable level considering the company's track record and AI prospects. So, instead of rushing to get in on D-Wave after its massive gains, it may be a better idea to seize this AI buying opportunity. Alphabet is an earnings growth machine right now, and the price is right, meaning today is a fantastic time to invest.

Adria Cimino 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.