In a surprise twist of event, $Alphabet(GOOG)$ closed 2025 as one of Wall Street’s biggest winners after a strong rebound driven by its AI push.
Investor confidence improved when GOOG showed that its AI tools complement and support search usage and ad demand, rather than weaken its core business.
2025 Performance Comparison.
Among the Magnificent 7, GOOG emerged as the top performer in 2025, with the stock up about +65%, its best year since 2009. (see above)
Even AI chipmaker leader, $NVIDIA(NVDA)$ only managed as the next best, rising about +35%.
GOOG investors are (now) focused on whether gains in AI products, Cloud demand, and AI infrastructure can keep the AI momentum going.
GOOG’s AI Doubles Down.
GOOG's recovery was a hard-fought battle.
In Q1 2025, GOOG fell nearly -18%, their weakest stretch since mid-2022, as investors feared AI chatbots like ChatGPT could pull users and ad dollars away from Google Search.
Momentum picked up only after GOOG rolled out updates to its Gemini models and pushed the Gemini app more aggressively. (see below)
Gradual upgrade throughout 2025
New features, including popular image tools, helped drive higher usage and renewed interest in the platform.
At the same time, demand for GOOG’s custom AI chips, TPUs, continued to grow.
Partnerships, including AI-related work with $Meta Platforms, Inc.(META)$, highlighted GOOG’s emerging role as a key provider of AI computing power.
Collectively these wins helped change GOOG’s narrative.
Analysts’ Positive Turn.
Wall Street’s view on GOOG changed once its AI strategy becomes clearer.
Citizens JMP Securities, Senior equity analyst Andrew Boone raised his price target on GOOG to $385 from $340 and reiterated a Buy rating.
He said recent AI updates are making search more useful, leading users to engage more.
As such, he expects faster ‘search’ revenue growth in Q4 2025, a key point investor will watch closely when earnings are reported on 03 Feb 2026.
Beyond search, analysts also pointed to strength in cloud computing and long-term bets like autonomous driving through Waymo as added drivers / catalysts, this new year.
Overall Rating and Price Target.
According to Wall Street analysts polled:
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GOOGL stock has a Strong Buy consensus rating based on 27 Buys and 7 Holds assigned in the last 3 months.
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At $327.42, the GOOG average share price target implies almost +4.61% upside potential.
The AI Conundrum
A dark cloud of skepticism still hang over the AI sector as investors weigh the potential for a market correction driven by NVDA’s controversial circular financing links.
However, Citigroup, Head of US Equity strategy, Scott Chronert, believes:
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US market is in a “boom” phase rather than a bubble.
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He enters the new year with a positive outlook.
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In his interview with CNBC, Chronert said that his team is taking a “glass half full” view.
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Especially when looking at the impact of artificial intelligence on markets.
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He admitted that although investors may be pricing in next year’s growth earlier than usual, he stated that market conditions still look supportive.
Overall, he described the setup as strong and constructive rather than overheated.
More specifically, he expects GOOG, AMZN, META, MSFT, NVDA, TSLA & AAPL to keep delivering solid results through earnings beats and higher guidance.
FYI, the Magnificent 7 make up about 40% of the market’s total value and remain critical to overall earnings growth.
GOOG’s 2026 Outlook.
As of 02 Jan 2026, GOOG is at a pivotal valuation threshold.
At the end of 2025, the company has successfully transitioned from a "defensive AI play" to an “aggressive offensive leader”.
The "dark cloud" of skepticism regarding AI monetization is being dispelled by GOOG’s ability to convert its massive $155 billion cloud backlog into tangible revenue.
Activities ranging from Agentic AI to silicon sovereignty, are poised to propel GOOG toward analyst bull-case targets of $350.00 – $375.00.
"Agentic Autonomy": Gemini 3.0 & beyond
While 2024–2025 was the era of the chatbot, 2026 is the year of autonomous AI agent.
Gemini 3 Pro & Flash:
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Launched in late December 2025, Gemini 3 has introduced "PhD-level reasoning."
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Unlike previous iterations, it features a "Thinking" mode that allows it to self-correct and plan multi-step tasks.
The Gemini Agent:
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Currently in US preview, this product is expected to hit general availability by mid-2026.
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It can navigate Gmail, Calendar, and live web browsing to complete end-to-end workflows (eg, Research a trip, book the flights, and sync the itinerary with my team).
Monetization of Search:
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By mid-2026, GOOG is expected to fully integrate ads into Gemini conversations.
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With over 2 billion monthly users already interacting with AI Overviews, the transition from traditional "link-clicking" to "agent-assisted" search represents a massive expansion of ad inventory.
Silicon Sovereignty: The TPU v7 "Ironwood" Advantage
Google is systematically breaking the "NVIDIA tax" that has squeezed the margins of its competitors.
2026 will be remembered as the year GOOG’s custom silicon, the Tensor Processing Unit (TPU), became a major external revenue driver.
Ironwood - TPU v7:
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Commercialized in November 2025, Ironwood delivers 4.7x better performance-per-dollar on LLM inference than NVDA’s H100/H200.
The Anthropic & Meta Factor:
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Anthropic has committed to deploying one million TPUs in 2026 to scale its Claude models.
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At the same time, Meta is in advanced talks to lease GOOG’s TPU capacity starting in mid-2026, a move that could save Meta billions while providing GOOG with high-margin "Silicon-as-a-Service" revenue.
Cost Efficiency:
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With energy costs becoming a bottleneck, Ironwood’s 67% lower power consumption per token makes GOOG Cloud the most sustainable and cost-effective destination for hyperscale AI.
GOOG Cloud: From Growth to Profit Powerhouse
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In Q3 2025, GOOG’s Cloud hit $155 billion, up +46% YoY. (see above)
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Wall Street expects GOOG’s Cloud to grow 31%.
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$Morgan Stanley(MS)$’s modelling tool even predicted over 50% growth, driven by $50 billion in new backlog and a 15% rise in on-demand services.
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Operating margins reached 23.7%, amid 34% YoY growth, driven by Vertex AI and Gemini tools securing multi-year enterprise deals in security and infrastructure.
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A $93 billion 2025 CapEx, rising further in 2026, to funds TPU/GPU infrastructure, pitting GOOG’s Cloud against AMZN’s AWS & MSFT’s Azure.
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GOOG is set to complete acquisition of Wiz for $32 billion, with the deal closing in 2026. (see above)
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This strategic move will consolidate their lead in cloud security and establish a 'Fort Knox' environment for AI development.
Waymo: Commercial Reality.
For years, Waymo was a drag on the balance sheet. In 2026, it will help drive the company's story, even if it isn't profitable yet.
Goals and Valuations.
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Target 1 million weekly rides by end 2026; quadrupling 2025's 360,000 rides.
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This will yield a $1 billion annualized revenue, run rate from its 1,500+ vehicle fleet.
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Recent funding rounds have pegged Waymo’s valuation near $100 billion, roughly double its 2024 value.
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As it scales toward its annual revenue goal, the "sum-of-the-parts" valuation for GOOG increases significantly.
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Waymo is slated to launch in 12 new cities in 2026, including international expansion into London.
"London Bridge" to Global Scale.
This year also mark Waymo’s shift from a localized US experiment to a global transportation utility.
Expansion into the United Kingdom will be the centerpiece of this strategy.
London Launch:
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Following the passage of the UK’s Automated Vehicles Act, Waymo officially confirmed in late 2025 that it will launch its first international commercial service in London, UK in 2026.
Operational Groundwork:
As of January 2026, Waymo’s white Jaguar I-PACE fleet is conducting 24/7 mapping and testing across 20 of London’s 32 boroughs.
This is a massive leap in complexity (compared to Phoenix or San Francisco), requiring the "Waymo Driver" to navigate London's high-density traffic and narrow, historic streets.
Fleet Partnership:
GOOG has partnered with Moove (Uber-backed fleet manager) to handle the 24/7 maintenance, charging, and logistics for the London fleet.
The Million Rides:
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The London pilot aims to replicate Waymo’s US success, that reported 5x fewer injury-causing collisions than human drivers.
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Achieving this benchmark could push Waymo’s valuation past $100 billion and act as a major catalyst for GOOG share price.
Technical Analysis.
As of 31 Dec 2025
GOOG exhibits a generally bullish technical profile, supported by a strong uptrend through much of the previous year. (see above)
Simple Moving Averages (SMA)
Stock price remains positioned above its major long-term moving averages, which act as dynamic support levels.
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20-Day: Ended 2025 at $313.32. Price is currently oscillating around this level, showing short-term consolidation.
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50-Day: For 2025 year end, its $297.33. This remains a key support zone; a bounce here confirms intermediate bullish momentum.
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200-Day SMA: At $218.38, the significant gap above the 200-day average throughout 2025 underscores a robust long-term uptrend.
Moving Average Convergence Divergence - MACD
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As of 31 Dec 2025, GOOG's MACD (4.21) is trading below its signal line (5.24), resulting in a negative divergence of -1.02 that indicates a bearish crossover.
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This means upside momentum has started to weaken and a short-term pause or correction is possible, while long-term trend remains positive (MACD is still above the zero line).
Relative Strength Index - RSI
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The 14-day RSI was 57.66.
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Indicating that GOOG is in neutral territory, it is not overbought or oversold leaving room for further movement in either direction without immediate exhaustion.
Formation.
In terms of formation, GOOG showed signs of “cup and handle” formation in the first three quarters of 2025. For last quarter, it was an “ascending channel”.
Cup & Handle.
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A “cup” was observed with a deep, rounded recovery throughout H1 2025, where the price dropped toward $142 in the Spring.
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GOOG steadily climbed back to test previous resistance near $180-$190 by mid-Summer.
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The “handle” was identified as a short and tight consolidation/pullback that occurred around July / August before GOOG launched into its massive year-end rally toward $300+
GOOG’s pattern is "textbook" because the eventual breakout led to an explosive +60% YTD gain, fulfilling the typical price target expectations of a cup and handle.
GOOG's past 6 months performance
Ascending Channel.
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This formation is clearly exhibited in latter half of 2025 (September–December).
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When breakout occurred (Sep - Oct), GOOG stopped forming "rounded" shapes and began trading in a very disciplined ascending channel (a "bullish" one).
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GOOG characteristically made consistent higher highs and higher lows, "hugging" the equilibrium levels of a rising trendline rather than forming a new base. (see above - blue & purple lines)
Personally, I think GOOG is set to climb higher in 2026 by leveraging its custom AI chips to undercut competitor costs.
Simultaneously, the company is scaling its autonomous driving and agentic AI services to transform itself from a legacy search engine into a high-margin autonomous powerhouse.
I see every reason to hold onto this tech leader and maybe even add more. Agree?
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