Why Alphabet Could Be the Best AI Stock to Buy Right Now
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If you looked up "artificial intelligence" in the dictionary, you might expect to see Nvidia’s logo right next to it. While I’m joking, it’s no secret that Nvidia has become the face of the AI revolution.
Nvidia’s journey has been nothing short of extraordinary. Over the past five years, the company's stock has surged by an astounding 2,560%, outpacing the Nasdaq Composite Index by a wide margin. To put this in perspective, a $10,000 investment made in September 2019 would be worth an eye-popping $266,000 today.
Missed Nvidia’s meteoric rise? Don’t worry—there may still be an AI stock worth your attention, and it might not be the one you expect.
Nvidia's Phenomenal Growth
Many investors believe Nvidia’s enormous gains are well-deserved. The company produces the graphics processing units (GPUs) that are essential to powering the AI systems fueling the current tech revolution. As businesses scramble to integrate AI into their operations, Nvidia has been a primary beneficiary.
Research from Mizuho Securities suggests that Nvidia controls between 70% to 95% of the market for AI chips. Unsurprisingly, its growth has been explosive. In the fiscal second quarter of 2025 (ending July 28), Nvidia reported a 122% increase in revenue, jumping from $13.5 billion a year ago to $30 billion.
The company is also highly profitable, with a gross margin of 75% and an operating margin of 62% in the latest quarter. No wonder investors are bullish—Nvidia’s market value has swelled to a staggering $2.7 trillion.
However, there’s a catch. Nvidia’s stock is trading at a price-to-earnings (P/E) ratio of 52, making it one of the priciest among the "Magnificent Seven" tech stocks. This may give potential investors pause.
Why Alphabet Deserves Attention
While Nvidia often steals the spotlight when it comes to AI, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) could be the best AI stock to consider right now. In fact, Alphabet has been incorporating AI into its products long before the recent boom.
As far back as 2001, Alphabet was already using AI to enhance its search engine’s capabilities, such as assisting users with spelling corrections. Long before OpenAI’s ChatGPT took the world by storm in late 2022, Alphabet was already embedding AI in various services like Google Maps, Gmail, and Google Photos.
In 2016, CEO Sundar Pichai declared Alphabet to be "AI-first." Since then, AI has become an integral part of the company’s operations. While the road hasn’t always been smooth, Alphabet’s latest AI model, Gemini, has gained significant traction. Pichai noted during Alphabet’s Q2 2024 earnings call that all six of Google’s products with more than 2 billion monthly users now integrate Gemini, showcasing how deeply AI is woven into the company’s offerings.
What sets Alphabet apart is its vast reach. With billions of users, the company can quickly roll out new AI features to an enormous audience, gaining rapid feedback that helps improve its products.
And Alphabet’s financial muscle is hard to ignore. In the second quarter of 2024, the company generated $54 billion in annualized free cash flow and holds a net cash balance of $87.5 billion. This massive financial cushion enables Alphabet to continue making significant investments in AI without straining its resources.
Moreover, unlike Nvidia, Alphabet’s stock valuation is much more palatable, trading at a P/E ratio of just 23. With its long-standing dominance in the tech world and deep AI integration, Alphabet looks poised to thrive in an AI-driven future.
Is Alphabet the Best AI Stock for You?
Before diving into Alphabet stock, consider this: the Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks to buy now—and Alphabet didn’t make that list.
Keep in mind that Nvidia was recommended by Stock Advisor back in 2005. Had you invested $1,000 at that time, your investment would now be worth an incredible $656,938.
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