Google’s AI : Alphabet, Google’s parent company, is rapidly strengthening its position in the artificial intelligence race, surprising investors who just a year ago believed the company was falling behind rivals like OpenAI. Now, Wall Street increasingly views Alphabet as a leader in AI — and its latest earnings call reinforced that shift in sentiment.
During the company’s post-earnings call on Wednesday, Alphabet executives spoke with new confidence, marking the first major update since the launch of Gemini 3, Google’s latest AI model. The product has received strong user feedback and helped close the gap with competitors.
AI Investments Begin Delivering Real Returns
Alphabet’s messaging highlighted a key change: AI investments are now driving growth across the entire company, not just within its cloud business. This broader impact is a major reason the company is considering nearly doubling its capital spending in 2026, with projected expenditures between $175 billion and $185 billion to expand AI computing infrastructure.
“Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board,” said CEO Sundar Pichai.
In contrast to previous years, Alphabet’s AI strategy is no longer limited to future potential — it is now showing measurable financial returns.
Gemini Gains Momentum With Users and Businesses
Alphabet’s consumer and enterprise AI products are both seeing strong adoption. Pichai revealed that the Gemini app reached over 750 million monthly active users by the end of December, up from 650 million in the prior quarter. While this still trails OpenAI’s ChatGPT, engagement has increased significantly since the release of Gemini 3.
Gemini technology is also being integrated into Google Search through “AI Mode” and into business tools. Google’s enterprise Gemini platform has already reached 8 million paying licenses, signaling growing acceptance among corporate customers.
Investors React to Big Spending — Then Regain Confidence
Alphabet’s massive capital expenditure forecast initially worried investors, sending the stock down as much as 6% in after-hours trading. However, strong results from Google Cloud — which posted 48% revenue growth in the December quarter — helped reassure markets that AI spending is producing results.
This reinforced a clear message from Wall Street: AI investment is acceptable only if it leads to real revenue growth.
Although Alphabet’s stock dipped 3% in premarket trading Thursday, the bigger picture remains positive. The shares rose 65% last year and are already up 6% in 2026.
Alphabet Pulls Ahead of Big Tech Rivals
Since early last year, Alphabet has gone from being viewed as an AI laggard to standing near the top of the tech world. It now ranks alongside Nvidia and Apple as one of the few companies with a market value above $4 trillion.
Meanwhile, concerns are growing around companies closely tied to OpenAI. Microsoft’s shares dropped sharply last week after it announced reduced capital spending, and investors have become uneasy about OpenAI’s heavy spending despite ongoing losses.
Oracle and Microsoft — both deeply linked to OpenAI — have seen their stocks fall significantly, while Alphabet’s shares have climbed roughly 36% over the same period.
Analysts say Alphabet benefits from strong cash reserves, diversified revenue, and less dependence on any single AI partner.
“Right now, the market is favoring Google,” said one portfolio manager. “Google has the hot hand.”
Conclusion
Alphabet’s AI strategy is no longer about catching up — it’s about leading. With Gemini gaining traction, strong cloud growth, and AI driving revenue across the business, Google is convincing investors that its massive spending is justified. As doubts grow around OpenAI’s financial sustainability, Alphabet is increasingly seen as the safer, stronger long-term AI bet.
What Do You Think?
Q: Do you think Alphabet’s AI-first strategy will help it dominate the next phase of tech growth, or does OpenAI still have the edge?
Comment boxes are open for your answers.
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