Can you imagine a stock that plunges more than 20% at one point, only to roar back with a triple-digit rebound and end the year as the undisputed champion? That’s exactly what happened in 2025, and it wasn’t some obscure small-cap play—it was one of the biggest names in tech.
I’ve followed the markets for years, and rarely do you see such a dramatic turnaround. It makes you wonder: what kind of forces can drive that kind of recovery? And more importantly, could we be looking at the setup for another strong run ahead?
Let’s dive into why this tech giant emerged as the clear leader in the AI space this year, and why some experts believe the best might still be yet to come.
Why 2025 Became the Year of the Comeback
Picture this: early in the year, shares were deep in the red. Investors were nervous. Questions swirled about competition in artificial intelligence, slowing growth in core businesses, and whether the massive investments in new tech would ever pay off.
Fast forward to the end of December, and the narrative had completely flipped. A gain of over 65% made it the top performer among the so-called Magnificent Seven group of mega-cap tech stocks. That’s not just beating the market—that’s dominating it.
In my view, the turning point came from tangible progress in AI capabilities. Upgrades to the company’s flagship AI model started delivering real-world improvements that users could feel. Suddenly, the fear of being left behind evaporated, replaced by excitement about untapped potential.
But what really caught my attention was how the rebound wasn’t built on hype alone. It was grounded in core business strength meeting emerging opportunities at just the right moment.
The Role of Search in Driving Recovery
At its heart, this company still earns the vast majority of its revenue from search advertising. And for a while, there were genuine concerns that generative AI chatbots might eat into that dominance.
Instead, the opposite happened. New AI-powered features actually increased user engagement. People started searching more, not less.
Think about it: when answers appear directly in search results with rich summaries, or when experimental modes let users dive deeper into topics conversationally, it keeps them on the platform longer. More time spent means more opportunities for ads.
Query growth is accelerating as AI enhancements drive more search engagement.
On the advertiser side, smarter bidding tools have opened up new inventory. Rather than matching ads strictly to keywords, the system now connects intent across broader queries. That means a higher percentage of searches can carry advertising—quietly expanding the overall pie.
It’s subtle, but powerful. I’ve seen similar shifts before in digital advertising, and they tend to compound over time.
Cloud Growth: The Under-the-Radar Engine
While search gets most of the headlines, the cloud division has been quietly building momentum. Enterprises are increasingly choosing this platform for their AI workloads, drawn by custom hardware accelerators and tight integration with AI tools.
What stands out to me is how the company isn’t just renting servers—it’s offering a full stack that makes deploying complex AI models easier and cheaper. For businesses racing to implement generative AI, that kind of advantage matters enormously.
- Rapid adoption of specialized AI chips designed in-house
- Growing ecosystem of developer tools and frameworks
- Strong gains in market share against larger competitors
- Increasing enterprise commitments to long-term contracts
Analysts expect this segment to become an even bigger growth driver in the coming years. Perhaps the most interesting aspect is that cloud profitability has already started improving significantly, turning what was once a drag on margins into a potential booster.
Waymo: From Science Project to Real Business
Remember when self-driving cars felt like distant science fiction? Well, one part of this company has been operating fully driverless ride-hailing services in multiple cities for years now.
The pace of expansion has accelerated lately. More vehicles on the road, new geographic markets, partnerships with traditional automakers—it’s starting to look like a legitimate commercial enterprise rather than just an expensive research project.
Here’s what excites me: the unit economics appear to be improving rapidly as scale increases. Fewer safety drivers needed, better utilization rates, falling costs per mile. If those trends continue, this could evolve into a massive profit center over the next decade.
Of course, regulatory hurdles remain, and competition is fierce. But having a multi-year lead in real-world miles driven gives a substantial moat that’s hard to replicate.
Looking Ahead: What 2026 Might Bring
Recent analyst updates have turned notably more bullish. One prominent voice raised their price target substantially, implying more than 20% upside from current levels.
Their reasoning? Continued acceleration in core search, meaningful contributions from cloud AI infrastructure, and early commercialization progress in autonomous mobility—all feeding into stronger overall results.
We believe multiple medium-term catalysts should help inflect results positively in 2026 and 2027.
– Wall Street analyst note
Broader sentiment aligns with this optimism. The vast majority of covering analysts maintain positive ratings heading into the new year.
Valuation Considerations in Context
Naturally, after such a strong run, questions arise about whether shares have become too expensive. On traditional metrics, the stock trades at a premium to the broader market—but arguably at a discount to some peers when growth rates are factored in.
What I find compelling is the breadth of growth drivers. Unlike companies relying on a single narrative, this one has multiple independent levers: mature cash cow businesses funding ambitious new bets that are beginning to scale.
In my experience, these layered growth stories often justify richer multiples, especially when execution appears solid.
- Core advertising remains resilient and innovative
- Cloud infrastructure gaining serious traction in AI era
- Autonomous technology moving toward profitability
- Ongoing efficiency improvements supporting margins
Risks Worth Watching Closely
No investment thesis is complete without acknowledging potential pitfalls. Regulatory scrutiny remains elevated across multiple jurisdictions. Antitrust actions could force structural changes, though outcomes are uncertain and often drawn out.
Competition in AI is intensifying rapidly. Well-funded rivals are releasing impressive models, and open-source alternatives continue advancing. Staying ahead requires sustained heavy investment.
Economic sensitivity is another factor. Advertising budgets can tighten during downturns, though search has historically proven relatively resilient compared to other categories.
These risks are real, but they’re largely known and arguably reflected in the current price. The question becomes whether the growth opportunities outweigh them.
Positioning for the Longer Term
For investors with a multi-year horizon, the combination of dominant market positions, massive R&D budget, and diverse growth initiatives creates an intriguing setup.
I’ve learned over time that the most rewarding investments often involve companies undergoing meaningful transformation while maintaining strong underlying fundamentals. This feels like one of those situations.
Whether 2026 delivers another outsized gain or more moderate appreciation, the structural trends appear favorable. AI integration across products, cloud momentum, and autonomous progress aren’t one-time events—they’re multi-year compounding stories.
Sometimes the market gets ahead of itself. Other times, it takes longer than expected to recognize building value. In this case, 2025 showed what can happen when perception catches up to reality quickly.
Could something similar play out again? Only time will tell. But the ingredients seem to be there for continued strong performance if execution remains sharp.
At the very least, it’s a story worth keeping on the watchlist as we turn the calendar page.
Disclosure: This article reflects personal analysis and should not be considered investment advice. Always conduct your own research before making financial decisions.
