Why Alphabet Could Be Your Top AI Stock Choice Today

The artificial intelligence (AI) boom has taken the stock market by storm. The S&P 500 (SNPINDEX: ^GSPC) has advanced 55% in the last two years, and AI promises to drive more upside in the coming years as it boosts productivity and efficiency across industries.

Experts have compared AI to transformative events like the creation of the microprocessor, the personal computer, and the internet. Such technological shifts manifest maybe once a decade. Investors wishing to benefit from the AI boom need to consider buying stocks today.

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AI Agents: A Growing Trend in the Market

Wall Street is now focusing on AI agents, which differ from traditional AI copilots. The agentic AI market is expected to grow at 45% annually through 2030, according to Grand View Research. Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) is well positioned to benefit, and its stock price is quite appealing.

Here’s why Alphabet stands out as a top AI stock right now.

The Future of Work with AI Agents

Artificial intelligence agents have varying definitions, often overlapping with traditional AI copilots. However, traditional AI copilots handle simpler tasks, such as summarizing service issues. In contrast, AI agents tackle complex problems, such as resolving customer service issues autonomously.

Experts envision a workplace transformation where companies will enhance human workers with AI agents functioning as dedicated digital assistants. Nvidia CEO Jensen Huang recently mentioned that while his company might employ 50,000 people, up to 100 million AI agents could be working alongside them.

Image source: Getty Images.

Alphabet: A Leader in AI Cloud Services

Alphabet’s Google is a long-established leader in AI research. The company utilizes this expertise to create new revenue streams in its advertising and cloud sectors. For example, generative AI features in Google Search are driving user engagement and satisfaction, reinforcing its dominance in search advertising.

However, Google’s most significant opportunity lies within cloud computing. In the past year, Forrester Research has recognized the company as a leader in AI infrastructure and machine learning platforms. Analyst Mike Gualtieri stated, “Google is the best positioned hyperscaler for AI,” highlighting its unique advantages that may prompt businesses to switch from other providers.

Google ranks as the third-largest public cloud provider, accounting for 13% of cloud infrastructure spending. In comparison, Amazon and Microsoft hold 31% and 20%, respectively. Notably, Google gained market share last year as its AI business flourished. Nearly 90% of unicorns in the generative AI space utilize Google Cloud services.

As companies increasingly adopt agentic AI, Google stands to gain further in the cloud market. Earlier this year, Google enhanced its Vertex AI platform by introducing capabilities for building AI agents, aiming for a share of the anticipated $50 billion market by 2030.

Some real-world applications include ADT, which develops AI agents to assist customers with home security systems. InterContinental Hotels Group is creating AI agents to help travelers plan vacations. Meanwhile, researchers at Mayo Clinic are designing AI agents to aid healthcare professionals in navigating clinical data.

Valuation Insights on Alphabet Stock

The International Data Corporation estimates that spending on public cloud services will rise at 19% annually through 2028. AI platform investments, such as Google’s Vertex AI, are projected to increase at a much faster rate of 51%, driven largely by the demand for agentic AI solutions.

Wall Street forecasts Alphabet’s earnings will grow at 16% annually over the next three years. However, faster growth is possible, especially as the company expands its share in cloud infrastructure and services, asserting itself as a leader in multiple AI product areas.

Even without upward revisions to earnings estimates, Alphabet’s current valuation of 25 times earnings appears reasonable. Thus, Alphabet seems to be a strong AI stock, and long-term investors might consider establishing a position now.

Seize This Opportunity in the Stock Market

Have you ever felt like you missed out on investing in top-performing stocks? If so, this might be your moment.

Occasionally, our expert analysts recommend stocks they believe are on the verge of significant growth. If you fear you missed your chance, now might be the ideal time to invest before the opportunity slips away. Consider these past examples:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $374,613!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,088!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $475,143!*

Right now, we are issuing “Double Down” alerts for three incredible companies, and this opportunity may not come again soon.

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*Stock Advisor returns as of January 6, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends InterContinental Hotels Group Plc and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.