Key Points
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Alphabet can monetize AI in multiple ways.
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It has a strong and profitable foundation.
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Investors should watch the heavy AI investment.
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If I could buy just one stock this month and hold it for the long term, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) would be at the top of my list.
The reason is simple: I believe artificial intelligence (AI) could become one of the biggest investment opportunities of the next decade, and Alphabet is positioned to benefit from it in several ways.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
But unlike some companies that depend almost entirely on AI spending, Alphabet already owns highly profitable businesses that generate billions of dollars in revenue.
That combination makes it an attractive long-term candidate.
Alphabet has several ways to win from AI
Alphabet is much more than Google Search. It owns YouTube, Google Cloud, Android, and a range of widely used digital services. These businesses give it access to billions of users and provide multiple ways to monetize AI.
Consider three opportunities:
- Google Search: AI is changing how people find information, but that doesn’t necessarily mean Google will lose its existing competitive position. Alphabet is integrating AI into Search to provide more useful answers and handle more complex questions. If it succeeds, it could make Search more valuable rather than replace it.
- Google Cloud: Businesses need computing infrastructure to develop and operate AI applications. Alphabet provides that infrastructure through Google Cloud, creating another major growth opportunity.
- Gemini: Alphabet can distribute its AI models through products that people already use, including Search, Android, and Google Workspace. It can also generate revenue through subscriptions and enterprise services.
That Alphabet has multiple ways to win in the years to come is an important advantage.
Its existing businesses provide a strong financial foundation.
Unlike most AI investments, Alphabet’s investment case isn’t based entirely on future promises. Even without including future opportunities, Alphabet is already a massive, profitable business.
For perspective, in the third quarter of 2026, revenue increased 25% year over year to $127.6 billion. Operating income rose 30% to $40.6 billion.
Google Cloud was particularly impressive, with revenue more than doubling to $30.7 billion. Its operating income also increased to $11.1 billion from $3.6 billion a year earlier. Meanwhile, Google Search revenue grew 12%.
These numbers demonstrate something important: Alphabet’s AI opportunity is already translating into meaningful business growth, particularly in cloud computing.
Better still, its existing profitable businesses also provide a foundation to fund further investment in AI. That diversification matters over five years. If one part of the AI market disappoints, Alphabet still has other businesses capable of generating revenue and profits.
The biggest risk is the cost of winning the AI race
There is, however, a reason investors should not overlook the risks. Building AI infrastructure is expensive. Alphabet is investing heavily in data centers, servers, networking equipment, and other computing resources. In Q3 alone,capital expenditure (capex) reached $51.4 billion. That was enough to push quarterly free cash flow into negative territory, at $9.1 billion.
Management expects full-year 2026 capex of $195 billion to $205 billion, with spending increasing significantly again in 2027.
This is a substantial commitment. If AI demand continues growing and these investments generate attractive returns, the spending could strengthen Alphabet’s competitive position for years. But if demand disappoints or computing capacity becomes less valuable than expected, the company could end up with expensive infrastructure that takes longer to pay off.
There is also a competitive risk. Companies such as OpenAI and Anthropic are challenging Google’s position in AI. Alphabet has the resources to compete, but it is not guaranteed to win every battle.
Why I would still consider holding it for five years
For me, the attraction to Alphabet is the combination of an established business and a significant new growth opportunity. Alphabet already has products used by billions of people. It has a profitable advertising business, a rapidly growing cloud division, proprietary AI models, and the infrastructure to integrate these technologies.
Few companies have all these advantages.
Over the next five years, I would watch three things closely: whether Search maintains its competitive position, whether Google Cloud continues growing profitably, and whether AI investments translate into stronger free cash flow.
If it delivers on all three areas, the stock is well positioned to create enormous shareholder value in the next five years.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again
In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. If you’d invested $5,000 then, you’d be sitting on $2,426,128 today.*
Now, for the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. It’s a key player in the $1.8 trillion space race, and with the stock recently sitting 20% off its highs, the window to get in early is closing fast.
Continue »
*Stock Advisor returns as of November 9, 2026.
Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
