Share prices of Google parent Alphabet (GOOG 2.26%) (GOOGL 2.29%) have doubled since hitting a 52-week low of $140.53 in April. Investors might feel the stock is no longer as attractive at the current $278 share price, but the momentum in Google's cloud business could boost the stock in 2026.
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Google is demonstrating AI leadership
Alphabet has built world-class artificial intelligence (AI) infrastructure that delivers excellent power efficiency, speed, and high-bandwidth networking for demanding workloads in the cloud. Strong demand drove an impressive 34% year-over-year increase in cloud revenue in the third quarter.
NASDAQ: GOOGL
Key Data Points
As Google Cloud scales, it is converting more revenue into profit that will benefit the stock. Through Q3 2025, Google Cloud reported a $10.7 billion operating profit on a trailing-12-month basis. This is a major improvement over the operating losses the cloud business reported just a few years ago.
The latest versions of Google's Gemini AI model have ranked among the top performers in leading benchmarks. This is driving strong adoption, with Gemini processing 7 billion tokens per minute across 650 million monthly users. Gemini is the AI brains behind the company's consumer and cloud enterprise services, making it a valuable asset for the company.
Despite the stock's rally over the last few months, it still looks attractive, trading at just 25 times next year's consensus earnings estimate. This could justify more highs for the shares in the new year.
