Alphabet’s stock concluded 2025 with its most robust performance since 2009, a year that saw the company’s shares double in the wake of the financial crisis. Alphabet’s stock surged 65% over the year, slightly outpacing its 2021 gains. After hitting its lowest point in April amid trade tariff threats, the stock has since climbed over 100%.
Among the eight tech giants valued at over $1 trillion, Alphabet emerged as the top performer. Following closely were chipmakers Broadcom and Nvidia, which saw gains of 49% and 39%, respectively.
This remarkable turnaround for Google was achieved despite significant skepticism regarding its ability to maintain leadership in the artificial intelligence era. The ascendance of OpenAI’s ChatGPT and Sora, coupled with anxieties surrounding the future of online advertising in the age of AI chatbots and agents, had positioned Google’s established business model as vulnerable to disruption. The company’s 18% stock decline in the first quarter marked its worst performance since mid-2022.
However, sentiment began to shift in the second quarter. In April, Google appointed Josh Woodward, a 16-year veteran, to lead the Gemini app, its direct response to ChatGPT. By August, Woodward’s team launched Nano Banana, an AI-powered image generator within Gemini that allows users to create personalized digital figurines by blending multiple photos. This feature quickly went viral, and by the end of the following month, the Gemini app had surpassed 5 billion images and claimed the top spot on Apple’s App Store, unseating OpenAI’s ChatGPT.
Google’s AI talent acquisition efforts also bolstered its capabilities over the summer. The company announced an agreement to bring Varun Mohan, co-founder and CEO of AI coding startup Windsurf, and other senior research and development personnel into the fold. This acquisition followed failed acquisition talks between Windsurf and OpenAI, which had been negotiating a $3 billion deal. Google ultimately secured the talent for $2.4 billion in licensing fees and compensation.
**Dominance in AI and Legal Victories**
Adding to its momentum, Google received a favorable outcome in a high-profile legal battle. Despite a previous ruling that found Google held an illegal monopoly in internet search, U.S. District Judge Amit Mehta’s September decision significantly curtailed the Justice Department’s proposed penalties. Google was permitted to retain its Chrome browser and continue its practice of making payments to secure prominent placement for its products on other platforms. This includes the lucrative arrangement with Apple, under which Google pays billions to be the default search engine on iPhones. A key concession from the ruling, however, requires Google to share certain data with competitors.
The accelerated development and adoption of Gemini have been a pivotal narrative. In November, Google unveiled Gemini 3, an advanced AI model, less than eight months after the release of Gemini 2.5. While ChatGPT still leads in overall user engagement, Gemini has been rapidly closing the gap. Data from Similarweb indicates that ChatGPT’s share of generative AI traffic has decreased to approximately 68% from 87% a year prior, while Gemini’s share has climbed to roughly 18% from about 5% during the same period.
Analysts at Citizens noted in a recent report that the true significance lies not just in Gemini’s progress but in how Google’s AI investments are impacting its core search business. The AI Overviews feature, which provides AI-generated summaries for search queries, is seeing improved relevance due to the integration of updated AI models, further enhancing user engagement. “We come away believing Google can further accelerate search revenue in 4Q25, which we view as the key question near term,” the analysts stated, maintaining a buy recommendation on the stock.
Beyond search, analysts also point to Google’s strength in cloud computing, where it competes with Amazon Web Services and Microsoft Azure, and its leadership in robotaxis through Waymo, as potential growth catalysts heading into 2026.
With significant investor interest, expectations for Alphabet are exceptionally high. LSEG data projects fourth-quarter revenue growth of 15% to over $111 billion, with low-teen growth anticipated throughout the upcoming year. In October, Alphabet revised its 2025 capital expenditure forecast upwards to $93 billion, from $85 billion, and analysts anticipate this figure to exceed $114 billion in 2026, according to FactSet. CEO Sundar Pichai has consistently attributed this increased spending to soaring demand, noting on the October earnings call that Google Cloud signed more deals exceeding $1 billion in the first three quarters of 2025 than in the preceding two years combined.
However, some market observers caution about potential volatility. Analysts at Pivotal Research warned that if OpenAI, a significant Google customer, faces financial difficulties or reduces its spending, it could negatively impact AI stocks and the broader market. Despite this, Pivotal maintains a buy rating on Alphabet and has raised its price target, suggesting substantial upside potential from current trading levels. They believe any market shakeout would be a healthy consolidation, ultimately leaving fewer, more dominant competitors, with Google at the forefront.
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