Choosing the right stocks can help investors outperform the S&P 500. Paradoxically, many of the same technology stocks that offer this potential also play an outsized role in driving the index’s overall performance. The Magnificent Seven stocks make up nearly a third of the S&P 500's total market cap, and Alphabet (GOOG 1.68%) (GOOGL 1.66%) stands out as a particularly compelling opportunity right now.
The company is a leader in multiple industries, and artificial intelligence (AI) has helped it gain market share in new opportunities.
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Many people use Alphabet's services every day
Alphabet is one of the most valuable companies, in large part because so many people use its services. Google is the default search engine for many browsers, and it commands roughly 90% of the search market. That doesn't even factor in YouTube capturing more than 1 billion hours of attention every day through its vast video library.
NASDAQ: GOOG
Key Data Points
Google Cloud, a key part of the company's AI ambitions, is the third-largest cloud provider, making up roughly 14% of the entire industry. It has a big lead over competitors below it. Google Cloud powers many websites and AI tools, and its revenue growth has been accelerating in recent quarters.
Gemini is another catalyst for Alphabet that has more than 750 million monthly active users. This AI model keeps people on Google's search engine and has monthly subscription plans that could become a large part of future revenue growth.
Driving growth across multiple industries
Alphabet captures people's attention in multiple industries, but that's not enough to justify a stock-buying opportunity. A company must continue to turn the attention it receives into accelerated income growth, and Alphabet is also delivering on that front.
Overall revenue increased by 18% year over year in Q4 2025. Google Cloud was a key contributor, with sales up by 48% year over year. Profit margins also jumped, based on Alphabet delivering 30% year-over-year net income growth.
All of this growth comes as Alphabet continues to tap into artificial intelligence. This technology has enhanced the company's search engine, social network, and cloud computing segments. However, it is also creating new opportunities, such as autonomous vehicles. Waymo cars have already expanded into multiple U.S. cities and may change the way people request ride-hailing services.
The perfect blend of immediate revenue growth, sustainable business segments, and moonshot opportunities has turned Alphabet into a compelling stock as it approaches a $4 trillion market cap. The stock has rallied by more than 70% over the past year and has more than tripled over the past five years.
