Best AI Stocks to buy now
Written by Massa Medi
In a year saturated with headlines about artificial intelligence and fierce competition among tech giants, one question is surfacing for investors everywhere: Is Alphabet Inc. (GOOG, GOOGL) a smart AI stock to buy right now? Despite delivering robust quarterly earnings and driving impressive user engagement, Alphabet’s stock price hasn’t shown the thrilling upside that some investors might expect. So what’s holding it back, and should you be looking to invest at today’s prices?
In this article, we’ll peel back the curtain on Alphabet’s latest AI milestones, examine how its search business is evolving amidst revolutionary AI shifts, and highlight the competitive moat Alphabet is actively widening. We’ll also dig into current valuation metrics and what they mean for long term investors. Buckle up there’s a lot to unpack!
Alphabet’s AI Ambitions: User Growth Signals Explosive Demand
Let’s begin with the numbers that have Wall Street talking. According to Alphabet’s latest updates, active users in AI Studio and the Gemini API have surged by more than 200% since the start of this year. These aren’t just vanity metrics these figures showcase the rapid adoption and voracious market appetite for AI powered solutions across the globe.
To put this in context: AI Studio and the Gemini API are at the heart of Alphabet’s generative AI strategy, providing both end users and enterprises with the tools to innovate, automate, and scale at lower costs. This growth echoes a broader industry trend demand for efficient and scalable AI solutions is accelerating, and Alphabet is poised to meet it head on.
Gemini’s Reach: Powering the World’s Digital Ecosystem
Alphabet also revealed that all 15 of its core products with at least half a billion users now utilize Gemini models. That amounts to an extraordinary 500 million users spread across 15 distinct product lines, with 6 products boasting user bases of over a billion each. Think about the scale: products like YouTube, Gmail, Google Maps, and the Play Store each interwoven into daily life for a billion people or more are now supercharged with AI capabilities by Gemini.
The strategic edge here is undeniable. By integrating Gemini across such a vast platform suite, Alphabet can spread out its fixed costs, boost efficiency, and bolster unit economics. This enables Alphabet to reinvest more into R&D and AI breakthroughs, creating a formidable feedback loop that strengthens its competitive advantage.
Profitable AI Investment: Alphabet vs. OpenAI
Investors often worry that scaling up AI means burning cash at unsustainable rates but here’s where Alphabet shines. Consider OpenAI, the developer behind ChatGPT. While ChatGPT’s meteoric rise captures headlines, OpenAI reportedly remains deeply unprofitable, relying on fresh infusions of investor capital to stay afloat.
In contrast, Alphabet’s AI expansion is fueled by ongoing, healthy profits. Their unique position allows them to invest aggressively in AI advancements, refine their core products, capture more user engagement, and, in turn, generate more profits. It’s a virtuous cycle: profits fund AI, AI enhances the product experience, users engage more, and that drives even greater profits.
For investors, this operational prowess translates into an enduring ability to outspend and out execute smaller AI focused rivals, while maintaining strong financials.
Expanding AI Search: Real World Product Success
One particularly noteworthy development: after nearly a year since launching AI Overviews in the US, Alphabet continues to see rising usage, as users discover that AI enhanced search delivers greater utility and relevance. Now, the company is scaling this feature to new countries, reaching more people and embedding AI driven experiences even deeper in our daily information gathering.
Here’s why this matters: Some companies launch new features or products with great fanfare, only to see disappointing adoption rates, relegating their innovations to the sidelines. But Alphabet’s track record is refreshingly different. When Alphabet invests in R&D, they not only see meaningful user adoption, but these features persist, scale, and drive greater revenues. This ability to turn investment into profitable, widely used products is a core part of Alphabet’s DNA and a huge plus for investors seeking consistency and tangible results.
Circle to Search: Scaling Innovation Across Devices
Take the recent rollout of “Circle to Search”: this intuitive feature lets users simply circle anything on their device’s screen to instantly launch a relevant search. Already, Circle to Search is available on over 250 million devices, and its usage has exploded up nearly 40% this quarter alone. For a company the size of Alphabet, such rapid growth at scale is no small feat it underscores the company’s skill at identifying, developing, and delivering features that truly resonate with users on a global level.
Capital Expenditures: Risk or Opportunity?
Not all investors share the same level of optimism. In recent quarters, Alphabet has announced a sharp uptick in capital expenditures, fueling concerns among some shareholders about rising costs. But let’s add a dose of perspective here.
Alphabet has repeatedly earned trust by investing strategically and profitably for more than two decades. Their history of turning fresh investment into long term returns is well documented, with stellar returns on capital and a knack for creating enduring moats. When a company with this pedigree ramps up spending on promising projects, that’s not a red flag it’s a sign of future upside. In the world of innovation, standing still is riskier than moving forward.
As an investor, if you believe in Alphabet’s capital allocation acumen and have witnessed their consistent delivery on R&D bets, escalating investments should inspire confidence rather than caution.
Undervalued Opportunity? Crunching the Numbers
What does all this mean for Alphabet’s current valuation? Based on my intrinsic value per share calculation (updated as of April 25), I peg Alphabet’s fair value at $208.51 per share. As of this writing, however, the stock trades at $161.78 per share. That’s a sizeable discount to its underlying worth and a strong signal, for value oriented investors, that Alphabet remains undervalued even after its recent run up.
With a growing portfolio of monetizable AI innovations, robust user growth, continued profitability, and unmatched scale, Alphabet is squarely in my top nine stocks to buy in 2025.
Final Thoughts: A Rare Combination of Scale, Innovation, and Value
In a world brimming with AI hype and short lived tech trends, Alphabet stands apart. Its relentless innovation, proven investment discipline, and unmatched ecosystem give it an enviable edge in the battle for AI supremacy. If you’re searching for a company that consistently turns bold bets into real, sustainable profits and does so while creating indispensable products for billions Alphabet is hard to beat at today’s valuations.
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