There hasn't been a new industry in a long time that has captivated the markets quite like artificial intelligence (AI). What makes AI stand out from other buzzwords is that the results are clear and strong, and that it's being developed by stable giants as opposed to risky start-ups.
One of them is Alphabet (GOOG -0.04%), parent company of search engine Google. Alphabet is using AI in its search business as well as its cloud business, and it has incredible long-term opportunities. But it trades at a bargain price.
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Dominating with AI
It's been impossible not to notice the new AI summaries that appear on top of many Google searches these days. Alphabet has developed its own large language model (LLM) called Gemini that powers its search results to give users quick and readable answers to their questions. It also offers AI services to its advertisers to help them run successful campaigns, putting more dollars into its own pockets.
Alphabet also has a robust cloud computing segment, and it provides a large suite of AI solutions and tools for clients that want to develop customized apps through its platform. At least one Wall Street analyst recently said is "the most valuable company" based on its AI business. And as the AI race heats up, Alphabet, which is the fourth-largest company today according to market value, could surge higher.
One reason that could happen quickly is that its stock is trading at a bargain valuation of only 23 times forward earnings. As it gains ground in AI, its stock is likely to advance, and this valuation can easily handle higher gains.
