AI Initiatives Boosts GOOGL's Prospects: What's Ahead for the Stock?

Alphabet GOOGL is leveraging its growing artificial intelligence (AI) expertise to boost prospects. Expanding generative AI footprint GOOGL introduced Nano Banana Pro on Friday, which is built on Gemini 3 Pro. Nano Banana Pro is Alphabet’s new state-of-the art image generation and editing model. It follows the successful Nano Banana that Alphabet launched in August-end and is powered by Gemini 2.5 Flash Image model.

Nano Banana Pro is GOOGL’s latest advanced image model to date. It is now available in the Gemini app and is starting to roll out in AI Studio, Vertex and more. Nano Banana Pro features advanced text rendering in over multiple languages, and innovative controls like the ability to input up to 14 images into a composition. Users can now blend more elements using up to 14 images and the model helps in maintaining the consistency and resemblance of up to five people.

Alphabet’s models and tools including Nano Banana, the latest Gemini 3, Gemini 2.5 Pro, Veo and others have been gaining traction in recent times. In the third quarter of 2025, more than 230 million videos have been generated with Veo 3 and more than 13 million developers have built with GOOGL’s generative models. Alphabet processed 980 trillion monthly tokens across all its platforms and is now processing over 1.3 quarterly and monthly tokens, more than 20x growth in a year at the end of third quarter.

In October, Google DeepMind and Google Research teamed up with Yale to create Cell2Sentence-Scale, an AI model based on Alphabet’s Gemma family of open models. This could help make tumors easier for body’s immune system to spot and fight cancer, thereby opening a new cancer therapy process. Google DeepMind collaborated with Commonwealth Fusion Systems on applying advanced AI to bring clean, safe, and limitless fusion energy. 

Search business is benefiting from AI infusion. The company is leading the search domain with 90.06% market share, followed by Microsoft’s MSFT Bing, with 4.31% share, Yandex’s 1.84%, Yahoo!’s 1.45%, DuckDuckGo’s 0.89% and Baidu’s 0.73%, per the latest data from StatCounter. 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. Google Cloud is benefiting from generative AI adoption due to leading models including Gemini, Imagen, Veo, Chirp and Lyria.

GOOGL Faces Tough Competition in AI Domain

Microsoft’s AI business has surpassed $13 billion annual revenue run rate, representing 175% year-over-year growth. This performance underscores Microsoft's strategic positioning at the intersection of cloud infrastructure and AI, two sectors expected to drive technology spending through the remainder of the decade. Microsoft’s Fairwater is the world's most powerful AI datacenter in Mount Pleasant, WI, with a total commitment exceeding $7 billion. Google Cloud is facing stiff competition from Microsoft in the cloud computing space.

Apart from Microsoft, Alphabet is facing stiff challenge from Amazon AMZN in the AI and cloud domains. The company is spending heavily on fortifying Amazon Web Services (AWS) infrastructure that supports AI workloads and expanded data center capacity. In November 2025, AWS announced significant partnerships with leading AI companies and expanded availability of its generative AI services through Amazon Bedrock. The division introduced enhanced machine learning capabilities and launched new data center regions in strategic international markets, strengthening its competitive positioning against Microsoft and Alphabet.

GOOGL’s Share Price Performance, Valuation & Estimates

Alphabet shares have appreciated 88.4% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 26.7%.

GOOGL Stock Outperforms Sector

The GOOGL stock is trading at a premium, with a forward 12-month price/sales of 10.03X compared with the broader sector’s 6.61X. Alphabet has a Value Score of D.

GOOGL Valuation

The Zacks Consensus Estimate for 2025 earnings is pegged at $10.52 per share, up 5.2% over the past 30 days, suggesting 30.85% growth from fiscal 2024’s reported figure.
 

Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Alphabet currently carries a Zacks Rank #3 (Hold). 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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