1 Reason to Buy Alphabet Stock Hand Over Fist
Key Points
Alphabet's Search business is performing exceptionally well thanks to Gemini.
Gemini 3 has fueled higher user engagement with Search delivering smarter responses to user queries.
Higher spending on data center infrastructure may pressure earnings growth in the near term.
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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is showing investors it can profit from artificial intelligence (AI), sending its stock soaring over the past year. The growth in Google Search is one of the best reasons to buy Alphabet stock right now. It is the company's biggest growth engine, accounting for over 55% of Alphabet's total revenue. Gemini-powered experiences are driving higher user engagement and becoming a competitive advantage.
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Search revenue grew 17% year over year last quarter, reaching $63 billion. This momentum comes as the company launched Gemini 3 into its AI Mode search feature. In the U.S, management has seen the number of queries made with AI Mode double per user since launch.
Users are spending more time with Google Search as their searches are becoming longer and more conversational. This means there are more opportunities to show ads, generate more revenue, and continue reinvesting the profits in its AI capabilities.
While higher spending on data centers could pressure its near-term profitability, these investments are ultimately driving better AI and user experiences that can deliver long-term growth. For a leading AI company showing this much momentum in its core business, it's a compelling investment, trading at 28 times forward earnings estimates.
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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.
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