This Stock Is Shaping the Future of Artificial Intelligence (AI), but Is It a Buy Right Now?
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Artificial intelligence (AI) has been one of the most discussed subjects over the past few years. It's far from a new nology, but with the explosion in ity of generative...
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July 3, 2025
06:30 AM
The Motley Fool
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Artificial intelligence (AI) has been one of the most discussed subjects over the past few years
It's far from a new nology, but with the explosion in ity of generative AI tools OpenAI's ChatGPT, it has soared into the main
The AI landscape is layered and evolving daily
Some companies are laying the groundwork and foundation for the nology, others are using this foundation to build their own tools, and some are perfectly content with simply using tools, the average user
When it comes to companies shaping the future of AI, one of the first to come to mind is Google's parent company, Alphabet (GOOG -0. 06%) (GOOGL -0. 05%), which has been one of the key players in the development of AI as we know it today
A key contributor every step of the way What makes Alphabet so important to AI development starts with its re
Through its companies DeepMind and Google Re, Alphabet has been responsible for some of AI's biggest breakthroughs
It developed the transformer architecture that powers large language models (LLMs); it developed an AI gram called AlphaFold that predicts tein structures, allowing for faster drug and vaccine developments; and its AlphaGo gram was one of the first examples of how good AI could be at solving complex issues that many thought required human reasoning
Alphabet operates in all three phases of the AI pipeline: re and development, training and deployment, and real-world applications (Gemini, Google, etc
This helps keep operations lined, which may not be the case with companies that rely on other companies for infrastructure or AI models
For example, OpenAI relies on Microsoft for cloud infrastructure
The cash continues to pour in despite increased competition Some people have voiced concerns that AI tools could harm Alphabet's core, Google, by reducing the need to click on ads when users can type the same question into a tool ChatGPT and receive a more conversational answer
In theory, it's a fair concern, but there haven't been any signs of this tangibly harming Alphabet's
Alphabet continues to be a money machine, bringing in $90. 2 billion in revenue in the first quarter, up 12% year over year
This growth was led by Google Cloud, which increased its revenue by 28% year over year to $12
It bably won't ever catch up to Google (56% of its Q1 revenue), but it's a high-growth area that's beginning to carry more of its own weight
GOOGL Revenue (Quarterly) data by YCharts Alphabet is becoming too cheap to ignore Arguably the best thing Alphabet's stock right now is how undervalued it seems
It's trading at 18. 5 times its forward earnings, which is below the 21. 7 times the S&P 500 is trading at, and well below what the other "Magnificent Seven" companies are trading at today
For a company that has consistently grown through the years, the pessimism toward Alphabet's stock seems a bit overblown
It has top-tier in-house AI capabilities, a fast-growing cloud (third in market behind Amazon Web Services and Microsoft Azure), and a portfolio full of industry-leading companies Google, YouTube, and Waymo
I wouldn't invest in the stock expecting to double your money in a couple of years, but if you're a long-term investor, you ly won't regret at Alphabet's current prices
If you're concerned current volatility and market conditions, consider dollar-cost averaging your way into a stake
The stock is a bargain
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors
Stefon Walters has positions in Microsoft
The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft
The Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft
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