Alphabet (GOOGL +0.20%) (GOOG +0.19%) has become a dominant force in the internet age, with a market cap measured in the trillions of dollars. Since the company's initial public offering in August 2004, shares have generated a monster total return of 9,210% (as of Sept. 5). Had you invested $10,750 in this "Magnificent Seven" stock at the time, you'd have $1 million today.
While that's a wonderful historical outcome, investors are curious about what the future might bring. Could Alphabet stock help you become a millionaire one day?
Image source: Alphabet.
Google's position in the AI race
When it comes to artificial intelligence (AI), Nvidia gets all the attention. The company is deserving of all the love it receives, as it has become the leading data center AI GPU provider. Nvidia essentially provides the picks and shovels to power AI training.
But don't sleep on Alphabet. The company can be viewed as a comprehensive bet on the ongoing AI race.
For starters, Alphabet is working on its own chips, notably the Tensor Processing Units. Management calls out the newest iteration, known as Ironwood, as being very powerful and efficient. And with DeepMind, the business is involved in the cutting edge of AI research.
Alphabet's Google Cloud, which posted 32% revenue growth and an operating margin of 21% in Q2 (ended June 30), can't be overlooked. It provides various AI tools and features for customers to build on top of. "Nearly all gen AI unicorns use Google Cloud," CEO Sundar Pichai said on the Q2 2025 earnings call. This segment now has a massive backlog of $106 billion.
Then there are the end users of Alphabet's numerous products and services. "All 15 of our products with a half a billion users now use Gemini models," Pichai highlighted on the Q1 2025 earnings call. This creates a better user experience.
And we can't forget about advertisers. Alphabet is helping these customers create better and more effective campaigns, while driving higher return on investment. It's all about adding more value.
From bottom to top, research and infrastructure, and all the way to how people interact with AI, Alphabet is making moves. And in my view, this makes it one of the best AI stocks out there.
NASDAQ: GOOGL
Key Data Points
A worthy portfolio addition
Besides the fact that Alphabet is already a leader in AI, there are other reasons this business deserves a closer look from investors. Alphabet is incredibly profitable, generating $28.2 billion in net income just in the last three months. It has many durable competitive advantages, like network effects, its brand name, and a key intangible asset that stems from the company's ability to collect vast amounts of data. And lastly, Alphabet should continue to post solid revenue growth for many years.
But will the stock make you a millionaire? I'm not confident in this outcome, unless you can invest a huge sum upfront and extend your time horizon to several decades. Alphabet is worth $2.8 trillion today. It raked in $96.4 billion in sales in the second quarter. This scale naturally limits the company's expansion potential.
For what it's worth, shares trade at a price-to-earnings ratio of 24.9. This is about in line with the valuation of the overall S&P 500 Index, and it's cheaper than the other Magnificent Seven companies. This is a great investment opportunity no matter how you look at it.
Alphabet certainly isn't going to produce life-changing results for investors from this point forward, which is what it did in the past. However, it's still worthy of being considered for your portfolio. The stock has a good shot at beating the market in the next five years.
