Alphabet’s AI Momentum Fuels Market Confidence

Alphabet Inc., the parent company of Google, continues to demonstrate significant strength, trading close to its 52-week peak. The company's aggressive advancement of its artificial intelligence strategy, coupled with its navigation of global challenges, is reinforcing its market position. With a staggering market capitalization of approximately $3.8 trillion, the conglomerate now holds the title of the world's third most valuable company, positioned just behind Nvidia and Apple.

The rally in Alphabet's shares is underpinned by exceptional financial results. For the third quarter of 2025, the company surpassed the $100 billion revenue milestone for the first time, reporting $102.3 billion—a 16% year-over-year increase. Net profit saw an even more substantial jump, climbing 33% to $34.9 billion.

A key growth driver was Google Cloud, which generated $15.2 billion in revenue, representing a 34% surge. This performance is largely attributed to robust demand for AI infrastructure and generative AI services. The cloud division's remaining performance obligation, indicating future revenue, stands at $155 billion.

Analyst Sentiment Turns Bullish

Market analysts are responding positively to these developments. On December 12, TD Cowen raised its price target for Alphabet from $335 to $350, reaffirming its "Buy" rating. This adjustment was prompted by encouraging survey data showing increased usage of the Gemini chatbot, particularly following the launch of Gemini 3. The investment bank noted growing user engagement with Google Search, fueled by features like AI Mode and AI Overviews.

Notably, the data indicates a rising portion of ChatGPT users are also utilizing Gemini concurrently. Consequently, TD Cowen has increased its long-term revenue estimates for Google Search by an average of 2% annually for the period spanning 2026 to 2031. Another firm, Pivotal Research, expresses even greater optimism, setting a price target of $400 per share.

Strategic Moves in the AI Arena

Alphabet is taking direct aim at competitors in the generative AI space. On December 11, Google unveiled a revised version of its Gemini Deep Research Agent, built on the Gemini 3 Pro model. The timing was strategic, coinciding with OpenAI's launch of its GPT-5.2 model.

Should investors sell immediately? Or is it worth buying Alphabet?

This new agent allows developers to integrate Google's research capabilities into their own applications via a new Interactions API. The tool is designed to process vast quantities of information while minimizing inaccuracies, or "halluzinationen," in complex tasks—a clear challenge to OpenAI's market position.

Infrastructure Expansion Underway

Beyond software, Alphabet is making significant physical investments. Google is channeling $120 million into three submarine cables in Papua New Guinea. This project is funded by Australia as part of a mutual defense agreement. The cables will provide high-capacity connectivity to northern and southern Papua New Guinea, as well as the autonomous region of Bougainville.

This initiative follows Google's earlier announcement to construct a data center on Australia's Christmas Island, which will include cable links to key defense locations.

Legal Proceedings in Europe

The company is navigating a minor legal challenge in France. A court-appointed administrator for Google's dissolved Russian subsidiary secured a provisional asset freeze of approximately €110 million against Google France. This measure is based on arbitration rulings from Moscow in 2024 and 2025. Google retains the right to appeal, and formal recognition proceedings for these rulings could extend up to 18 months.

Valuation and Market Outlook

Since a pivotal court decision in September prevented a forced divestiture of the Chrome browser, Alphabet's stock has appreciated by nearly 50%. The shares currently trade at a price-to-earnings (P/E) ratio of around 31, with a price/earnings-to-growth (PEG) ratio of 0.88, which many analysts view as reasonable. The consensus among 43 covering analysts is a "Strong Buy" rating, with an average price target of $303.