Alphabet Rises 58% in a Year: Should You Still Buy the GOOGL Stock?

Alphabet GOOGL shares have jumped 58% in the trailing 12 months, outperforming the Zacks Computer and Technology sector’s appreciation of 27.3% and the Zacks Internet Services industry’s surge of 52.4%. GOOGL shares have beaten peers like Microsoft MSFT, Apple AAPL and Amazon AMZN over the same time frame. Shares of Microsoft, Apple and Amazon have returned 22.7%, 19.5%, and 16.3%, respectively.

GOOGL’s outperformance can be attributed to its continuing AI push across its search and cloud solutions. An expanding focus on improving enterprise footprint (through the launch of Gemini Enterprise) is expected to boost prospects amid stiff competition in the cloud computing domain and a challenging macroeconomic environment due to uncertainty over tariffs.

GOOGL Stock’s Performance

Let us find out what investors should do with GOOGL stock now.

AI Push Boosting GOOGL’s Search Dominance

Google continues to dominate the Search business with a roughly 90% share, followed by Microsoft’s Bing, with a 4.31% share, per the latest data from StatCounter. The company has been actively embedding AI, especially within Search, to enhance user experience, provide better AI-focused features and consequently improve ad performance. This is driving Google Search and other revenues, which increased 14.5% year over year to $56.57 billion in the third quarter of 2025.

AI Overviews and AI Mode are driving overall queries and commercial queries. AI Mode is now available in more than 40 languages globally and has more than 75 million daily active users. GOOGL added 100 improvements to AI Mode in the third quarter of 2025. AI Mode is already driving incremental total query growth for Search. The addition of shopping capabilities in AI Mode is now helping people shop conversationally in Search. For advertisers, AI Max and Search are already used by hundreds of them, currently making it the fastest-growing AI-powered search ads product.

Expanding Cloud Footprint Aids GOOGL Stock

Alphabet’s Google Cloud is benefiting from rising AI revenues, with cloud backlog growing 46% sequentially to $155 billion in the third quarter of 2025. Google Cloud revenues jumped 34% year over year, driven by growth in Google Cloud Platform (GCP) across core products, AI Infrastructure and Generative AI Solutions.

The number of new GCP customers increased by roughly 34% year over year and Alphabet signed more deals over $1 billion through the reported quarter than it did in the previous two years combined. Expanding clientele and relationships have been driving top-line growth, with more than 70% of existing Google Cloud customers currently using its AI products. 

Google Cloud is benefiting from generative AI adoption due to leading models including Gemini, Imagen, Veo, Chirp and Lyria. Revenues from products built on Alphabet’s generative AI models grew more than 200% year over year. Over the past 12 months, nearly 150 Google Cloud customers each processed roughly one trillion tokens with Google models for a wide range of applications. Gemini Enterprise is gaining adoption with more than two million subscribers across 700 companies.

Earnings Estimate Revisions Positive for GOOGL Stock

The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $2.57 per share, up four cents over the past 30 days, indicating 19.53% year-over-year growth. The consensus mark for fourth-quarter 2025 revenues is pegged at $94.09 billion, indicating 15.28% year-over-year growth.
 

Alphabet Inc. Price and EPS Surprise

Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote

The consensus mark for 2025 earnings is pegged at $10.49 per share, up 5.3% over the past 30 days, suggesting 30.47% growth from the 2024’s reported figure. The Zacks Consensus Estimate for 2025 revenues is pegged at $339.75 billion, suggesting 15.12% growth from the 2024’s reported figure.

GOOGL Stock is Trading at a Premium

A Value Score of D suggests a premium valuation for Alphabet at this moment. GOOGL stock is overvalued, with a forward 12-month price/sales of 8.09X compared with the industry’s 6.37X, sector’s 6.9X and Amazon’s 3.01X. However, the GOOGL stock is cheaper than Microsoft’s 11.41X and Apple’s 8.4X.

GOOGL Stock’s Valuation

Conclusion

Alphabet’s growing AI-powered search capabilities and significant investments in cloud computing bode well for long-term investors. This also justifies Alphabet’s premium valuation.

Alphabet currently has a Zacks Rank #2 (Buy), suggesting that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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