Shares of Alphabet (GOOGL +1.92%) (GOOG +2.05%) have rocketed 67% over the last six months. Google has proven more competitively resilient against OpenAI and other AI model makers than Wall Street was giving it credit for earlier this year.
Just because the stock has run up sharply in recent months doesn't mean it can't move higher. Here's why I would buy the stock now, ahead of the company's third-quarter earnings scheduled for Oct. 29.
Image source: Getty Images.
Demand for AI is accelerating
Google should report another strong quarter. For Q3 2025, revenue is expected to be up 13% year over year, according to data on Yahoo! Finance. For perspective, the company reported a 14% increase in the second quarter.
NASDAQ: GOOGL
Key Data Points
Artificial intelligence (AI) is driving strong usage of Search, and growing enterprise demand for AI services should lead to another blowout quarter for Google Cloud. In Q2, Google Cloud's operating profit more than doubled year over year.
Management previously said it would ramp up capital expenditures to support accelerating buildout of data centers to support growing demand. The returns on these investments won't be realized for a few years, but it shows that Google sees sustainable demand in cloud and AI services stretching for many years.
Regardless of how the stock responds after the earnings news, I'm in favor of building a position now with the stock trading at just 24 times next year's earnings estimate. Demand for AI is accelerating. Alphabet is likely going to announce another better-than-expected quarter that could send the stock higher heading into 2026. Investors could see excellent returns over the next five years from the current share price.
