How to Play GOOG Stock as Google Gemini Sends a Chill Down Sam Altman’s Spine

The battle for artificial intelligence (AI) dominance is heating up on multiple levels. We have the intense rivalry between the U.S. and China, which are vying for global AI leadership. At another level, there is growing competition in the chip space as companies try to break Nvidia’s (NVDA) dominance in the lucrative AI chip market.

There is also the rivalry between AI companies across different domains, which was on full display when Amazon (AMZN) sent a “cease and desist” letter to Perplexity, accusing its AI-powered shopping assistant Comet of violating the company’s terms of service by failing to identify itself.

OpenAI Lost Users After Gemini 3 Was Released

Now, it seems the competition between ChatGPT and Google is getting intense, and OpenAI CEO Sam Altman has reportedly declared a “Code Red.” The move came after the company, valued at $500 billion at last count, reportedly lost 6% of its users since the launch of Gemini 3, which Google said was its “most intelligent” model. While investors have been comfortable with the billions of dollars OpenAI has been losing every quarter, the last thing they want is a growth slowdown, let alone losing users.

Notably, while markets were circumspect on Alphabet stock (GOOG) (GOOGL) amid competition from AI upstarts, I always maintained that the Sundar Pichai-led company wasn’t a dinosaur in waiting, silently watching its search dominance being nibbled at by AI chatbots.

Alphabet Stock Has Outperformed in 2025

Let’s face it, if a poll were held at the beginning of the year on which would be the best performing Magnificent 7 stock in 2025, Alphabet wouldn’t have been the top choice. However, that’s precisely what has happened, and GOOG shares are up over 66% this year, which is over twice what runner-up NVDA has delivered this year.

Incidentally, despite all the AI euphoria, the remaining five Magnificent 7 stocks are underperforming the S&P 500 Index ($SPX), with Amazon placed at the bottom with mid-single digit YTD returns.

Why Has GOOG Stock Outperformed in 2025?

Things have been transforming from good to better for Alphabet this year. Its search and cloud businesses have performed quite well, with the latter continuing to gain market share at Amazon’s cost. The company reported stellar results for Q3 2025, with quarterly revenues topping $100 billion for the first time, led by 15% and 34% year-over-year increases in search and cloud revenues, respectively.

Alphabet won a major reprieve in the Department of Justice antitrust case as District Judge Amit Mehta allowed it not only to retain Chrome and Android, but also to continue its partnership with Apple (AAPL) that makes it the default choice on iPhones. It was the best-case scenario that the company could have reasonably hoped for, and the stock saw a sharp rally following the ruling.

In October, Anthropic announced plans to buy as many as 1 million of Alphabet’s Tensor Processing Units (TPUs), and reports suggest that Meta Platforms (META) is also in talks to buy chips worth billions of dollars from the company. Optimism over Alphabet’s AI chips is also making markets bullish on the company. 

While Wall Street gradually warmed up to Alphabet shares as the company literally fired on all cylinders, it received what I would say is the biggest vote of confidence for a tech company after Warren Buffett’s Berkshire Hathaway (BRK.B) disclosed a stake in the company in its Q3 13F filing.

While we don’t know whether it was the “Oracle of Omaha” who bought the shares, or one of his lieutenants at the conglomerate, it was a watershed moment for Berkshire, as first, Buffett previously admitted to missing out on GOOG, and second, it would be only the second major tech stock in the company’s portfolio after Apple.

Finally, I would add that what really helped GOOG’s rally were the depressed valuations that it entered 2025 with. The stock has since seen a valuation rerating with the forward price-earnings (P/E) multiple expanding to 30x.

Is GOOG Stock a Buy?

While I continue to remain invested in Google, I am not adding more shares as the valuation rerating has played out. We are still not in a frothy territory as I noted in my previous article, but at these valuations, I am not too comfortable adding more shares and will continue to sit out for a better entry point. The upside risk, however, comes from sales of AI chips, which could potentially add billions more to Alphabet’s revenues. 

On the date of publication,

Mohit Oberoi

had a position in: GOOG
, META
, AMZN
, AAPL
, NVDA
, BRK.B
. All information and data in this article is solely for informational purposes.

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