Remember when people worried Google was falling behind in artificial intelligence?
Yeah, me neither anymore.
Something remarkable has happened over the past few months. The narrative flipped almost overnight. The company that was supposedly asleep at the wheel suddenly looks like it’s driving a Formula 1 car while everyone else is still warming up their engines. And according to one of the most bullish analysts on Wall Street, this shift isn’t just real it’s about to send Alphabet’s stock into the stratosphere.
The $400 Call That Raised Eyebrows
Last Friday, a senior analyst at Pivotal Research dropped what might be the boldest call of 2025 so far: Alphabet is a buy with a $400 price target. That’s not a typo. Four hundred dollars. Roughly 26% above where the stock closed before the note hit trading desks.
To put that in perspective, the average Wall Street target sits around $310. Most analysts think the stock is already priced to perfection after its monster run. This guy basically looked at the same data everyone else sees and said, “Nah, you’re all missing the bigger picture.
And honestly? His reasoning is hard to argue with once you dig into it.
Gemini Isn’t Just Competitive It’s Winning
Let’s start with the elephant in the room: Gemini.
For years, the story was that OpenAI had lapped the field. ChatGPT came out swinging, caught everyone flat-footed, and suddenly Microsoft had the inside track on the future of AI. Google scrambled, threw together Bard (remember Bard?), and the market decided the war was already over.
Fast forward to today and the latest Gemini models aren’t just catching up they’re pulling ahead on multiple key benchmarks. Real, meaningful leads. The kind that make engineers at competing labs lose sleep.
Google appears to be winning everywhere across the AI stack.
Senior tech analyst, December 2025
That quote isn’t marketing fluff. It’s coming from someone who spends his days tearing apart earnings reports and talking to industry insiders. When he says Google is winning “everywhere,” he means the full vertical: models, infrastructure, distribution, monetization. Everything.
The Economics Are Brutal for Competitors
Here’s where things get really interesting and really uncomfortable for OpenAI.
Training frontier AI models costs absurd amounts of money. We’re talking billions of dollars in compute spend, and those numbers are climbing fast. OpenAI has been raising money at valuations that assume they’ll maintain leadership indefinitely. But leadership comes with a price tag, and if you’re losing market share, that price tag becomes unsustainable.
The Pivotal note suggests something I’ve been thinking for months: Gemini’s rapid gains could force OpenAI to rethink its capital expenditure plans as early as 2026. Translation? They might have to slow down the money furnace because the revenue isn’t materializing fast enough to justify the burn rate.
Google? They’re printing cash from search. That resilient, moat-protected, pricing-power-rich cash cow that somehow keeps getting stronger even as AI threatens to disrupt everything.
Search: Still the Gift That Keeps Giving
People keep waiting for AI to kill Google Search. I’ve lost count of how many “Search is dead” articles I’ve read over the past two years.
Yet here we are, and Search is stronger than ever. Why? Because Google isn’t defending the old way of doing search they’re evolving it. Gemini powers better answers, better ads, better everything. And crucially, when users stay in Google’s ecosystem (even if they’re using AI features), Google keeps the revenue.
- Traditional search: Share revenue with Apple and others
- AI-powered experiences: Keep dramatically more economics
- Bonus: Apple now pays Google for Gemini access (yes, really)
That’s not disruption. That’s upgrading your golden goose so it lays platinum eggs.
The TPU Advantage Nobody Talks About (But Should)
While everyone obsesses over Nvidia’s latest chips, Google has been quietly building its own AI infrastructure advantage with Tensor Processing Units.
These aren’t just “good enough” alternatives. For many workloads especially the massive training runs needed for frontier models Google’s TPUs are materially cheaper and often faster than the competition. When you’re spending billions on compute, “materially cheaper” starts looking like a superpower.
This advantage flows straight to Google Cloud, which is finally hitting scale. The combination of better AI models + cheaper infrastructure + massive distribution through Search and YouTube? That’s a flywheel most companies can only dream about.
Why This Time Actually Feels Different
I’ve been investing in tech stocks for long enough to develop a healthy skepticism about “this time it’s different” claims. But something about Google’s AI transformation feels… structural.
It’s not just one product winning. It’s the entire stack aligning:
- Best-in-class models (finally)
- Massive compute advantage
- Unmatched distribution
- Cash printing machine to fund it all
- Multiple ways to monetize (search, cloud, chips, enterprise)
When Microsoft was making its OpenAI bet, Google looked vulnerable. Now? Microsoft has to explain why they’re spending $13 billion deep in a partnership that’s looking increasingly expensive while their main rival builds everything in-house with better economics.
The Stock Math Still Works at $400
Let’s run some quick numbers, because $400 sounds crazy until you actually do the math.
Alphabet currently trades around 23-24x forward earnings. Not cheap, but not crazy for a company growing 15-20% annually. If AI acceleration adds even 5% to that growth rate (a conservative assumption given cloud ramp and AI monetization), you’re looking at a stock that could justify 30x earnings without breaking a sweat.
Add in share buybacks (they’re repurchasing something like 6-7% of the float annually) and the path to $400 starts looking almost conservative.
The most compelling part? The market is still pricing in the “Google loses AI” scenario. Any evidence that scenario is dead (and we’re getting mountains of it) should drive multiple expansion.
Risks? Of course There Are Always Risks
Look, I’m not here to tell you Alphabet is risk-free. Regulatory pressure is real. Competition won’t roll over and die. Execution matters immensely.
But the specific risk that kept me cautious on Google for years the risk they miss the AI revolution appears to be evaporating before our eyes. When your biggest historical risk factor starts turning into a tailwind, that’s when you pay attention.
Sometimes the market gets it wrong for a long time. Sometimes it takes years for the story to play out.
And sometimes, every few years, a company that everyone wrote off as yesterday’s news quietly builds the infrastructure to dominate tomorrow’s economy.
Google might be having that moment right now.
The $400 price target might sound aggressive today. But if Gemini keeps winning, if Cloud keeps accelerating, if Search margins keep expanding… well, we might look back at $400 as the starting line, not the finish.
I’ve been wrong before. I’ll be wrong again.
But this particular story? This one feels different.
