Alphabet Climbs 65% on Gemini AI, Custom TPUs and $21B Anthropic Order
Alphabet shares jumped 65% in 2025 after investor enthusiasm over its Gemini LLM and proprietary TPUs fueled AI-driven revenue growth. A U.S. antitrust ruling preserved its default search deals on Chrome and Android, while Google Cloud secured a $21 billion Anthropic TPU order via Broadcom, boosting its AI infrastructure business.
1. Alphabet’s Stock Rally Fueled by AI Optimism and Model Breakthroughs
Alphabet shares climbed more than 65% over the past year, outpacing all of the so-called Magnificent Seven peers. Investors shifted their perception after the Gemini large-language model won acclaim for outperforming competing offerings in real-world benchmarks. Surveys of buy-side analysts showed that AI accounted for over half of Alphabet’s valuation uplift, compared with just 20% at the start of 2025.
2. Custom TPU Chips Drive Cost Advantage and Cloud Growth
Behind Gemini’s performance lies Alphabet’s decade-old tensor processing units (TPUs), custom AI accelerators that have cut model-training costs by an estimated 30% versus third-party GPUs. In the last quarter, TPU-based compute represented roughly 40% of Google Cloud’s AI revenue, up from 25% a year earlier. Major enterprise customers, including leading AI startups, have committed to multi-year TPU deployment agreements totaling over $60 billion through 2028.
3. Regulatory Victory Secures Search Distribution and Accelerates Ad Revenue
A favorable federal court decision in September allowed Alphabet to retain default search positions on Chrome and on devices running its Android license. That ruling preserved Alphabet’s 90% share of global general-search queries, preventing projected ad-revenue losses of up to $15 billion annually. In the quarter following the verdict, search revenue growth reaccelerated to 12% year-over-year, compared with 7% in the prior period.