Wall Street Backs Google as Gemini Fuels Massive AI Growth

Alphabet, Google’s parent company, has staged a remarkable turnaround in the artificial intelligence race. Just a year ago, investors believed Google was falling behind competitors like OpenAI. Today, Wall Street views Alphabet as an AI leader, a shift reflected in renewed confidence and a sharp rise in its stock.

Gemini 3 Boosts Confidence

Executives struck a notably confident tone during Alphabet’s latest earnings call — the first since the launch of Gemini 3. The new model has impressed users and helped Google close the gap in the AI race, prompting leadership to highlight tangible returns from its heavy AI investments.

AI Investments Drive Company-Wide Growth

Unlike earlier messaging that focused mainly on cloud revenue, Alphabet now says AI is fueling growth across the entire business. CEO Sundar Pichai emphasized that AI-backed infrastructure is delivering broad-based revenue gains, justifying plans to nearly double capital expenditure in 2026 to as much as $185 billion.

Gemini App Sees Massive User Growth

Google’s Gemini app, which competes directly with ChatGPT, crossed 750 million monthly active users by the end of December, up from 650 million in the previous quarter. While it still trails ChatGPT’s weekly usage numbers, Google is seeing higher engagement per user, especially after the Gemini 3 rollout.

Enterprise Adoption Strengthens Google’s Case

Gemini 3 is now embedded in Google Search’s AI Mode and also powers the enterprise version of Gemini. According to Pichai, the enterprise offering has reached 8 million paid licenses, reinforcing Google’s growing footprint beyond consumer AI tools.

Cloud Performance Reassures Investors

Alphabet’s aggressive capex outlook initially rattled markets, pushing the stock down in after-hours trading. However, fears eased quickly after its cloud business posted a 48% revenue jump in the December quarter, underscoring how AI is strengthening Google’s core businesses.

Alphabet’s Rising Market Standing

Since early last year, Alphabet has gone from being an AI laggard to a frontrunner among the “Magnificent Seven” tech giants. It now stands alongside Nvidia and Apple as one of the few companies with a market value exceeding $4 trillion.

OpenAI Exposure Weighs on Rivals

In contrast, companies closely tied to OpenAI are facing growing investor skepticism. Microsoft’s shares fell sharply despite lower spending guidance, as concerns mounted over its dependence on OpenAI. Oracle has also suffered steep losses, with much of its contract backlog linked to OpenAI’s future funding ability.

Wall Street Favors Google’s Stability

Market experts say Alphabet’s strong balance sheet and diversified AI strategy are winning favor. Analysts point out that while OpenAI continues to sign massive deals despite ongoing losses, Alphabet’s AI push is backed by steady revenue, deep reserves, and major partnerships with firms like Meta and Apple.

“Google Has the Hot Hand”

Fund managers agree that sentiment has clearly shifted. Where OpenAI once drew applause for every new deal, investors are now wary of overexposure. As one portfolio manager put it, Google currently holds the advantage — and the market is rewarding it.