Alphabet’s stock surged more than 65% in 2025, outperforming its Magnificent Seven peers. The primary catalyst was a shift in investor perception about artificial intelligence’s role at the company. Its Gemini large language model received widespread acclaim, while its decade-old custom Tensor Processing Units (TPUs) provided a structural cost advantage by reducing dependence on third-party chips. As a result, search revenue growth accelerated, with AI-powered features like Lens and Circle to Search boosting user engagement. A favorable antitrust ruling also preserved Alphabet’s distribution partnerships, allowing it to remain the default search engine on Apple devices and safeguarding its gateway position to the internet.

Google Cloud has emerged as a critical growth engine, generating roughly $15 billion in quarterly revenue and $3.6 billion in net income by Q3 2025. Its profit margin climbed to nearly 24%, up from 9% in early 2024. Backlog for cloud contracts expanded by 82% year-over-year to $155 billion, driven by demand for AI training and inference services. With over 70% of existing cloud customers adopting its AI tools and sustained momentum in TPUs and partner GPUs, analysts project Google Cloud’s net income could double from 2024’s $6.1 billion to around $12.2 billion in 2025 and approach $20 billion in 2026 if growth moderates to 60% year-over-year.