GOOG Alert: Buy Alphabet Stock for Explosive AI Growth

Now that it reasserts its dominance in AI, alphabet (NASDAQ:GOOG; NASDAQ:GOOGL) shares definitely look like a buy. Alphabet stock is currently at an all-time high, up nearly 30% so far this year. GOOG stock has risen 14% in the last month on the back of new AI technologies, regaining its position as a leader in the global AI competition.

The rise in share price pushed Alphabet’s market capitalization above $2 trillion for the first time. There’s likely much more room to run in Alphabet stock as the company benefits from a variety of tailwinds beyond AI, including a rebound in online advertising, growth in cloud computing and strong sales of its Pixel smartphones.

AI dominance

Alphabet just wrapped up its annual I/O developer conference, where it unveiled a variety of new AI products that impressed everyone in attendance.

Leadership showed how it is integrating AI into online search via Google, used by billions of people around the world every day. Executives also unveiled a new version of the Android operating system and updated the company’s most advanced AI technology, Gemini.

The centerpiece of the presentation was Project Astra, a new AI model that can talk to users in real time about everything they capture with their smartphone camera and categorize online search results. The company also unveiled a Gemini 1.5 AI model called Flash, which is faster and cheaper to run than previous versions of the technology.

Analysts agreed that Alphabet’s AI products were as strong or stronger than the latest technology from leading competitor OpenAI, which unveiled its latest AI model, GPT-4o, the day before Alphabet’s I/O developer conference .

Other strengths

Alphabet’s enthusiastic reception of its latest AI innovations is a welcome turnaround for the company. Analysts and investors had spent much of the past year criticizing Alphabet for lagging in AI competition and making missteps in the products it launched. While it’s great to see Alphabet leading the way in AI, that’s not the company’s only strength or the only reason to buy the stock.

At the end of April, Alphabet announced its first dividend payment, in parallel with its stunning first-quarter earnings. The technology giant announced it would pay a cash dividend of 20 cents per share starting June 17.

In addition to the quarterly dividend, Alphabet also announced a new share buyback program worth $70 billion. The company had $108 billion in cash at the end of the first quarter of this year.

Alphabet announced the dividend and share buybacks, as well as financial results that showed increasing strength in several areas. Highlights of the earnings report included YouTube advertising revenue of $8.09 billion, which beat forecasts of $7.72 billion.

Operating profit in Google’s cloud business more than quadrupled to $900 million, showing that the company is now generating significant profits in this business segment.

Management said online advertising is accelerating after a difficult 2022 and 2023, when rising interest rates forced other companies to cut advertising spending.

Buy Alphabet shares

There are many reasons to be bullish on Alphabet and its stock right now. The company is experiencing rapid growth opportunities with AI, online advertising and cloud computing. Add in a new dividend payment and a major share buyback program, and the choice becomes obvious. Alphabet shares are a buy.

OAt the time of publication, Joel Baglole was long GOOGL. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.