Key Points
Over the past five years, Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) shares have climbed by 145%, outpacing broader equities. The good news is that the tech leader is still riding a significant momentum that could lead to more market-beating returns in the coming years. In fact, in my view, Alphabet stock may double by the end of the decade. Here are three reasons why.
1. The core business is strong
Alphabet’s bread and butter is advertising. The company is a leader in the digital ads space thanks to Google and YouTube, both of which are the most popular platforms in their respective categories. Alphabet’s advertising business is improving thanks to artificial intelligence (AI), with AI overviews and AI mode driving stronger engagement. Sales growth in this unit has been robust. In the second quarter, Google advertising revenue was $81.6 billion, up 14.4% year over year. We could see ad sales growth maintain a solid northbound path as Alphabet doubles down on AI.
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2. Google Cloud is on fire
Alphabet’s cloud computing business is firing on all cylinders. In the second quarter, Google Cloud’s revenue was $24.8 billion, almost 82% higher than the year-ago period. There is a clear trend here. Cloud sales growth was 63% in the first quarter and 48% in the fourth quarter of 2025. The segment’s operating income was even more impressive. It came in at $8.8 billion, 212% higher than the prior-year quarter. Once again, Alphabet’s AI-related work is doing much of the heavy lifting, and there is more where that came from. Alphabet ended the quarter with a cloud backlog of $514 billion.
That grants the company significant visibility for at least the next few quarters. True, capex is growing fast, too. Alphabet initially expected capex between $180 billion and $190 billion this year. The company now expects to pour between $195 billion and $205 billion. Also, Alphabet’s free cash flow was negative in the second quarter. That spooked some investors, leading to a sharp post-earnings dip. But Alphabet is clearly benefiting from its AI investments and should continue to do so. The stock may rebound as Alphabet justifies its capex and revenue and earnings growth accelerate even further.
3. Plenty of other opportunities
Alphabet could tap into several lucrative growth avenues over the medium term. For instance, the company’s expanding Gemini ecosystem could prove to be a major strength. The app already boasts 950 million monthly active users, and almost 90% of Fortune 100 companies use it. Between subscriptions, integrated shopping capabilities, and more, growing engagement on the app could eventually help it meaningfully contribute to top-line growth. Alphabet is also making progress with its “other bets,” including Waymo, its robotaxi service.
This project likely won’t contribute much to sales growth by 2030, but as it expands the service to new cities, the market could reward Alphabet. In short, given the opportunities ahead, the stock is well positioned to crush broader equities through 2030, potentially doubling by then. That’s why investors should buy the stock.
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Prosper Junior Bakiny has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
