It looks like the next big technological shift is underway. Artificial intelligence (AI) has kicked off a gold rush. And companies looking to be leaders in this area have no intention of slowing down.
These are exactly the strategies that Alphabet (GOOGL +0.42%) (GOOG +0.31%) and Meta Platforms (META 0.60%) are deploying. Combined, they plan to spend $305 billion (at the midpoints of their forecasts) on capital expenditures (capex) just in 2026. Both businesses are going all in on AI.
But which is the better AI stock to buy and hold with a five-year time horizon?
Image source: The Motley Fool.
From infrastructure to end users
Alphabet isn't new to the AI race. It's been using similar capabilities for decades. In 2001, the company was leveraging machine learning to improve users' spelling in search queries. In 2016, Sundar Pichai shifted Alphabet's focus to becoming an AI-first enterprise.
In 2026, this business looks like a true AI juggernaut. Google DeepMind is a leading research lab. Alphabet is a dominant force at the infrastructure layer of AI, developing its own chips called Tensor Processing Units (TPUs).
And Google Cloud is a thriving platform that sells AI-related and other IT products and services to enterprise clients. It generated $58.7 billion in revenue and $13.9 billion in operating income in 2025. Google Cloud now has a backlog of $240 billion.
Alphabet has one of the most popular AI assistants in Gemini, which had 750 million monthly active users in the fourth quarter last year. The models underpinning Gemini also help to power the company's various platforms, like Search, Maps, Gmail, and YouTube. AI is improving the advertising experience for customers as well.
As mentioned, Alphabet's planned spending will be huge. It's targeting capex of $175 billion to $185 billion this year. Management says it will mainly go toward servers, data centers, and networking equipment. It's about building the computing capacity that's needed to fulfill the AI plan.
NASDAQ: GOOGL
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Bolstering user engagement and ad capabilities
Meta is also sparing no expense. Its capex is expected to be between $115 billion and $135 billion in 2026. Meta is extremely profitable with a strong balance sheet, easing concerns somewhat about these massive investment figures.
When it comes to AI bullishness, there might be no executive quite like Meta founder and CEO Mark Zuckerberg. He's not hesitating to bring on top AI talent. It was reported last year that the business was giving engineers pay packages worth up to hundreds of millions of dollars.
Investors can view Meta's AI playbook through the lens of its two key stakeholder groups: users and advertisers.
During Q4, the company had 3.58 billion daily active users across its social media apps. One use of AI has been to boost engagement by improving the algorithms to show more relevant content. Looking out longer term, Zuckerberg wants to develop personal superintelligence, which will be like a powerful AI assistant that people can lean on for all different kinds of tasks and objectives.
Advertisers are critical to Meta's financial success. CFO Susan Li said the business plans to launch its Meta AI business assistant, which can optimize ad campaigns, to more advertising customers. The company wants its AI to be able to automate the entire ad process by just knowing the budget and end goal.
NASDAQ: META
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Should you buy both stocks?
The advantage that both Alphabet and Meta have is that their businesses were already extremely successful before the AI craze kicked off. Consequently, they operate from positions of strength. Their products and services already have tremendous adoption. AI can simply be a tool that strengthens their existing platforms, making their competitive positions even more robust, especially since they have massive amounts of data, network effects, and vast financial resources to keep pushing forward.
When figuring out how to gain proper AI exposure, investors can choose both stocks for their portfolios. They each trade at forward price-to-earnings ratios that are well below 30. And they are poised to grow their profits over the long term.
If I were forced to pick one for a long-term investment, though, I would choose Alphabet. Its operations are much more diverse, giving it many ways to profit from AI.
