Google parent Alphabet (GOOG 0.54%) (GOOGL 0.49%) has had a very strong run since early this month. That's when a Federal judge ruled Alphabet wouldn't have to divest key assets as part of its antitrust decision, could continue paying distributors to pre-load its Search engine onto phones and other devices, and could retain some types of data it collects on its platforms for itself.
The sigh of relief over the better-than-feared ruling sent Alphabet shares up nearly 20% thus far in September and a solid 34% on the year, sending the company's market cap over $3 trillion.
But who's to say Alphabet can't double again? After all, the Search juggernaut was the cheapest Magnificent Seven stock to start the year. And even after its strong run, its stock only trades at 25 times earnings, which isn't that expensive compared to other AI darlings.
Speaking of generative AI, here's how this exciting new technology can boost Alphabet's value to $6 trillion by the end of the decade.
NASDAQ: GOOG
Key Data Points
Gemini improves Alphabet's existing assets
The advent of the AI wars has spurred Alphabet to move faster. After the initial shock release of ChatGPT in late 2022, Alphabet hunkered down, streamlined its workforce, and is now innovating at a very fast pace.
In 2024, Google added AI Overviews to Search, which have done a good job of keeping daily habit Google Search users from leaving Google as their first destination when seeking information. Then earlier this year, Google unveiled "AI Mode" which uses Google's Gemini large language model to give a chatbot-like experience within the Search interface.
Investors should expect more innovation within Search and other existing Alphabet assets, especially as Alphabet infuses Gemini into more products.
What's especially bullish about that is that the Gemini 2.5 model appears to be best-in-class in the industry today, even against rival OpenAI.
When it was released five months ago, Gemini 2.5 quickly shot up to the top of SimpleBench and LMArena, two independent LLM scoring sites. In computer coding, Gemini just took the Gold Medal at the recent 2025 International Collegiate Programming Contest (ICPC) World Finals. And since Google released Nano Banana, a leading image generation tool derived from Gemini 2.5, the Gemini app shot up to number on the App store for the first time on September 12.
And speaking of the court decision on Chrome, Alphabet is now looking to infuse its Chrome browser with Gemini features and agentic capabilities. Soon, users will be able to summarize complex information on a web page, refer back to an old web page one has visited in the past, have Gemini shop for groceries, book trips, or answer questions in AI mode all within the scope of the browser.
Just as Search is a daily habit for billions, Chrome is also a huge distribution asset for Alphabet. While Google accounts for about 90% of the Search industry, Chrome has nearly 70% of the global browser market, with a huge lead over second-place Safari. That makes Chrome a powerful distribution asset, whereby Alphabet can expose a massive user base to its now best-in-class AI tools.
Google Cloud
Even if Alphabet's own AI efforts don't win in the market, Alphabet is still exposed to revolutionary AI research through its cloud division. Alphabet has carved out a solid position as the third-largest cloud infrastructure, with a platform especially compelling for AI start-ups.
Google Cloud customers include an illustrious who's who of AI research, including former founders of OpenAI and Google DeepMind. That helped the unit accelerate growth 31.7% last quarter, with operating profits inflecting 141% off of a low number.
Image source: Getty Images.
Google Cloud just reached profitability in 2023, and is now on a near-$12 billion operating profit run-rate. Moreover, just over 50% of new revenue over the past year has fallen to the cloud unit's bottom line.
Assuming Google Cloud reaches $60 billion in revenue and $12 billion in operating profit this year, and that the unit can grow at a 20% compound annual rate through 2030 with just 40% incremental profits instead of 50%, by 2030 Google Cloud will be making $150 billion in revenue and $50 billion in operating profit.
In this investor's mind, that would put the value of Google Cloud alone at $1 trillion to $2 trillion by then, all by itself.
Waymo
Finally, self-driving robotaxis have gone from science experiment to reality, with Alphabet's Waymo being the first-mover by a wide margin. Waymo is already operating at scale in Phoenix, Los Angeles, San Francisco, Atlanta, and Austin. Later this year, Waymo will begin testing in winter climates in Denver and Seattle. Waymo is also targeting a 2026 opening in Nashville, and has Miami, Washington D.C., and Dallas in its sites in the near future.
In a smart move, Waymo is expanding aggressively, looking to take mindshare before Tesla (TSLA 0.44%) or any other would-be competitor can get a foothold. To drive adoption, Waymo is partnering with demand aggregators Uber, Lyft, and public transportation aggregator Via Transportation to grow demand as quickly as possible. With trust such an important factor in autonomous mobility, establishing itself as a safe alternative should yield tremendous benefits for Waymo in the future.
According to Goldman Sachs the autonomous robotaxi market is expected to grow at a 90% annualized rate through 2030. And while that would only put the autonomous rideshare industry at a $7.5 billion revenue run-rate in the United States by then, Goldman notes that is just the beginning. By 2040, Goldman estimates autonomous ridesharing will be cheaper than owning a car. And the business is expected to profitable too, with Goldman estimating vertically integrated autonomous vehicle companies garnering 40% to 50% gross margins.
All in all, Waymo could become another important multi-billion profit business for Alphabet in the 2030s, driving further growth and value. Combining Waymo with its other established profit centers, Alphabet seems set to become a veritable AI conglomerate in 2030, adding diversification and likely a valuation expansion by that time.
