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1 Unstoppable Artificial Intelligence (AI) Stock to Buy Before It Joins Nvidia in the $5 Trillion Club

Gary Lloyd | Oct 08,26 | 01:45 EST

Technology

Nvidia is currently the only company in the world valued at more than $5 trillion, but Alphabet is positioned to be the next to reach this milestone, driven by its comprehensive involvement in artificial intelligence.

How Alphabet quietly built an AI empire Alphabet has strategically developed a vast AI ecosystem, controlling multiple layers of the AI stack. This includes its proprietary Tensor Processing Units (TPUs), custom-designed silicon that initially powered Google's internal operations and cloud services but are now being made available to external customers for data center deployment. Beyond hardware, Google's AI model, Gemini, boasts a massive consumer user base of 950 million monthly active users and has achieved significant enterprise adoption, being utilized by nearly 90% of Fortune 100 companies. Furthermore, Alphabet has deeply integrated AI into its core businesses, leveraging it to enhance search and advertising through improved recommendations and targeting, which directly contributes to high-margin revenue. Its autonomous driving subsidiary, Waymo, also heavily relies on AI to operate its robotaxi services, which are already providing hundreds of thousands of paid rides weekly, demonstrating AI's practical application and scaling potential within the company's diverse portfolio. This broad and integrated approach underscores Alphabet's silent but robust expansion into various AI-driven markets. How AI can change Alphabet Artificial intelligence is poised to fundamentally transform Alphabet's financial performance and market position. Google Cloud, a significant driver of growth, reported an 82% year-over-year revenue increase to $24.8 billion in a recent quarter, complemented by an impressive backlog of $514 billion. This substantial backlog offers valuable visibility for growth investors, indicating sustained future revenue. Gemini, Google's advanced AI model, processes approximately 22 billion API tokens per minute, showcasing its immense capacity and potential. As Gemini's adoption expands across enterprise solutions, Workspace, Search, and various consumer products, Alphabet stands to gain numerous opportunities to monetize its extensive AI research and development. Additionally, Waymo, while not yet a major contributor to Alphabet's current financial results, represents a potent future growth engine. The autonomous transportation market is projected to be enormous, and Alphabet's ownership of one of the most mature platforms positions it strongly to capitalize on this trend. The key takeaway is Alphabet's diversified strategy: it doesn't rely on any single AI initiative becoming a standalone blockbuster. Instead, AI powers multiple revenue streams—advertising via enhanced search, software and subscriptions through Gemini, accelerated infrastructure spending benefiting Google Cloud, and hardware monetization via TPUs. This multifaceted approach, coupled with Waymo's potential in the physical world, provides Alphabet with an array of growth avenues, effectively giving it many 'shots on goal' in the evolving AI landscape. How Alphabet can reach a $5 trillion valuation Alphabet is currently valued at $4.2 trillion, meaning it requires approximately a 19% increase in market capitalization to reach the $5 trillion mark. This ambitious target appears achievable, according to Wall Street consensus estimates. Analysts project Alphabet's earnings per share (EPS) to rise to roughly $11.81 this year, further expanding to $15 in 2027, and reaching nearly $18 by 2028. Based on its current forward price-to-earnings (P/E) ratio of 23, multiplying the projected 2028 EPS of $18 by this P/E ratio results in a future share price of $414. This projected share price is about 20% higher than Alphabet's current stock price, indicating that the company could realistically surpass a $5 trillion market cap by 2028 without needing any 'multiple expansion'—meaning its valuation relative to its earnings would not have to increase. While there are inherent risks, such as Alphabet's substantial investments in AI infrastructure and intense competition from major players like OpenAI, Anthropic, Microsoft, and Amazon, these factors ironically reinforce the investment thesis. The article argues that Alphabet's vertically integrated AI businesses are well-positioned to consistently compound earnings over the long term. This comprehensive control over various aspects of AI, from hardware to software and services, suggests that analysts' bullish forecasts for Alphabet's ability to monetize its AI ambitions are well-founded.

How Alphabet quietly built an AI empire

Alphabet has strategically developed a vast AI ecosystem, controlling multiple layers of the AI stack. This includes its proprietary Tensor Processing Units (TPUs), custom-designed silicon that initially powered Google's internal operations and cloud services but are now being made available to external customers for data center deployment. Beyond hardware, Google's AI model, Gemini, boasts a massive consumer user base of 950 million monthly active users and has achieved significant enterprise adoption, being utilized by nearly 90% of Fortune 100 companies. Furthermore, Alphabet has deeply integrated AI into its core businesses, leveraging it to enhance search and advertising through improved recommendations and targeting, which directly contributes to high-margin revenue. Its autonomous driving subsidiary, Waymo, also heavily relies on AI to operate its robotaxi services, which are already providing hundreds of thousands of paid rides weekly, demonstrating AI's practical application and scaling potential within the company's diverse portfolio. This broad and integrated approach underscores Alphabet's silent but robust expansion into various AI-driven markets.

How AI can change Alphabet

Artificial intelligence is poised to fundamentally transform Alphabet's financial performance and market position. Google Cloud, a significant driver of growth, reported an 82% year-over-year revenue increase to $24.8 billion in a recent quarter, complemented by an impressive backlog of $514 billion. This substantial backlog offers valuable visibility for growth investors, indicating sustained future revenue. Gemini, Google's advanced AI model, processes approximately 22 billion API tokens per minute, showcasing its immense capacity and potential. As Gemini's adoption expands across enterprise solutions, Workspace, Search, and various consumer products, Alphabet stands to gain numerous opportunities to monetize its extensive AI research and development. Additionally, Waymo, while not yet a major contributor to Alphabet's current financial results, represents a potent future growth engine. The autonomous transportation market is projected to be enormous, and Alphabet's ownership of one of the most mature platforms positions it strongly to capitalize on this trend. The key takeaway is Alphabet's diversified strategy: it doesn't rely on any single AI initiative becoming a standalone blockbuster. Instead, AI powers multiple revenue streams—advertising via enhanced search, software and subscriptions through Gemini, accelerated infrastructure spending benefiting Google Cloud, and hardware monetization via TPUs. This multifaceted approach, coupled with Waymo's potential in the physical world, provides Alphabet with an array of growth avenues, effectively giving it many 'shots on goal' in the evolving AI landscape.

How Alphabet can reach a $5 trillion valuation

Alphabet is currently valued at $4.2 trillion, meaning it requires approximately a 19% increase in market capitalization to reach the $5 trillion mark. This ambitious target appears achievable, according to Wall Street consensus estimates. Analysts project Alphabet's earnings per share (EPS) to rise to roughly $11.81 this year, further expanding to $15 in 2027, and reaching nearly $18 by 2028. Based on its current forward price-to-earnings (P/E) ratio of 23, multiplying the projected 2028 EPS of $18 by this P/E ratio results in a future share price of $414. This projected share price is about 20% higher than Alphabet's current stock price, indicating that the company could realistically surpass a $5 trillion market cap by 2028 without needing any 'multiple expansion'—meaning its valuation relative to its earnings would not have to increase. While there are inherent risks, such as Alphabet's substantial investments in AI infrastructure and intense competition from major players like OpenAI, Anthropic, Microsoft, and Amazon, these factors ironically reinforce the investment thesis. The article argues that Alphabet's vertically integrated AI businesses are well-positioned to consistently compound earnings over the long term. This comprehensive control over various aspects of AI, from hardware to software and services, suggests that analysts' bullish forecasts for Alphabet's ability to monetize its AI ambitions are well-founded.