Is Alphabet Stock's Rally Over? Why AI Momentum Suggests There's More Runway

Alphabet shares have climbed 47% so far this year, handily beating the Nasdaq Composite’s 21% gain. With a $3.3 trillion market cap, the tech giant has already become massive—yet market observers believe the stock could still have significant upside remaining. The key catalyst? The company’s ability to turn its AI technology into hard revenue across multiple business lines.

How AI is Reshaping Alphabet’s Revenue Engine

The real story isn’t just that Alphabet invested in AI—it’s that the company is actually making money from it. This shift is evident across the business.

On the consumer side, Gemini has attracted over 650 million monthly users in just three years of existence. That kind of adoption for an AI product is remarkable. Meanwhile, AI is supercharging the company’s core advertising business. Search and YouTube are generating stronger returns as AI-powered features improve user engagement and targeting.

The enterprise picture is equally compelling. Google Cloud’s backlog hit $155 billion, marking a 46% year-over-year jump. This reflects genuine hunger from corporations desperate to leverage AI infrastructure. The Cloud division is essentially capturing the wave of businesses racing to build AI capabilities.

Financial Performance Backs the Narrative

Numbers don’t lie. Alphabet delivered robust results in Q3 with adjusted earnings per share climbing 35% year-over-year. That kind of earnings acceleration is the foundation for further stock appreciation.

What’s particularly noteworthy: even after the 47% rally, the stock trades at a reasonable 25x forward earnings based on 2026 consensus estimates. For a company at the forefront of AI commercialization, that valuation isn’t stretched—it leaves room for the market to price in continued growth.

The Bottom Line on Alphabet

The question isn’t whether Alphabet is too expensive to buy now. The question is whether you believe the company can sustain its AI-driven growth trajectory. With Gemini gaining traction, Cloud generating massive backlogs, and core advertising businesses strengthening, the evidence suggests Alphabet has multiple levers to pull. The stock’s recent surge reflects recognition of this shift—but the runway may just be beginning.