Alphabet Just Showed Why It's a Top AI Stock to Buy Right Now

If I had told investors last year that Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) would be one of the top artificial intelligence (AI) companies, I may have been laughed at. Alphabet has completed a phenomenal comeback and is easily among the best AI businesses out there, and its stock matches it. Over the past year, Alphabet's stock has more than doubled, showcasing its monster comeback. While some investors may be fearful of investing in Alphabet after a major run like that, I don't think it's too late.

Alphabet just showed why it belongs in the conversation of best AI stocks on the market, and there's plenty more growth ahead for this tech leader.

Image source: The Motley Fool.

Google Cloud is on fire

Most of Alphabet's AI-related revenue will show up in its Google Cloud division. Alphabet's AI strategy has basically been to offer the best free versions of AI, then get users to opt for more advanced models that charge per token used. Furthermore, many companies have opted to use Google Cloud's computing infrastructure, including its custom TPUs, to train and run AI models at a lower cost than GPU-based training. All of this added up to a blowout quarter for Google Cloud.

In the first quarter, its revenue rose a jaw-dropping 63% year over year to $20 billion. If Alphabet can keep that growth up, then the hundreds of billions of dollars it's spending on data center construction is justified.

But Google Cloud isn't the only division doing well. Last year, many believed that Google Search would soon be replaced by generative AI. However, that hasn't happened. What has happened is that Google has integrated generative AI into AI search overviews, essentially turning each Google search into a mini AI prompt. This is still highly profitable for Google, and its Google Search business rose 19% year over year, underlining how strong its core business is.

All of this added up to Alphabet growing its revenue at a 22% year-over-year pace. For Alphabet's size and maturity, this is just a phenomenal, blowout quarter, and if you own the stock, it's everything you wanted and more. But if you don't own the stock, is it still a good time to buy? While the best time to buy was when everything was on sale a month ago, now is still as good a time as any. Alphabet still has years of AI-related growth ahead, and that will power further gains. I think Alphabet is a great stock to invest in and forget about, along with adding to it as new capital becomes available. Alphabet is as solid a stock as it gets, and it just proved it to investors.

Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.