Momentum began to shift during the second quarter. In April, Alphabet promoted 16-year veteran Josh Woodward to oversee the Gemini application, the company’s flagship conversational-AI product. Four months later, Woodward’s team introduced the Nano Banana image generator, allowing users to create visuals by blending multiple photographs. The feature went viral and lifted Gemini past 5 billion generated images by late September, when the app overtook ChatGPT at the top of Apple’s App Store rankings.
Alphabet continued to bolster its talent pool in June by reaching an agreement to hire Varun Mohan, co-founder and chief executive of AI-coding start-up Windsurf, along with several senior researchers. The company agreed to pay $2.4 billion in licensing fees and compensation to secure Windsurf’s engineers after the start-up’s negotiations with OpenAI for a $3 billion sale collapsed.
Court ruling limits antitrust fallout
Alphabet received a legal boost in September. Although a federal jury determined in 2024 that the company maintained an unlawful monopoly in internet search, U.S. District Judge Amit Mehta declined to impose the harshest remedies sought by the Department of Justice. The ruling allowed Google to retain its Chrome browser and to continue paying device makers for default search placement, including the multibillion-dollar arrangement with Apple. One condition requires Google to share certain search-related data with rivals. (More background on the DOJ’s antitrust actions can be found on the Antitrust Division’s official site.)
Gemini 3 release narrows usage gap
Alphabet unveiled Gemini 3 in December, eight months after introducing Gemini 2.5. Data from Similarweb show ChatGPT’s share of generative-AI web traffic sliding to about 68% this month from 87% a year earlier, while Gemini’s share climbed to roughly 18% from 5%.
Citizens analysts wrote this week that Gemini’s integration into Google Search via AI Overviews is improving answer relevance, supporting engagement and advertising revenue. They forecast Alphabet can accelerate search growth in the fourth quarter and reiterated a buy rating on the stock.
Imagem: Internet
Cloud, autonomous driving add catalysts
Beyond search, analysts cite Google Cloud’s expansion and Waymo’s progress in robotaxis as additional drivers entering 2026. Chief Executive Sundar Pichai told investors on the October earnings call that Google Cloud closed more deals valued above $1 billion in the first nine months of 2025 than in the two prior years combined.
Alphabet raised its 2025 capital-spending outlook in October to as much as $93 billion, up from $85 billion, to meet demand for AI infrastructure. FactSet consensus shows capital expenditures surpassing $114 billion in 2026.
Revenue expectations climb alongside valuation
With the stock trading at $313 on Wednesday, many analysts see limited room for near-term missteps. LSEG data indicate Wall Street expects fourth-quarter revenue of more than $111 billion, a 15% increase from a year earlier, with growth in the low-teens projected throughout 2026.
Pivotal Research, which raised its price target on Alphabet to $400, cautioned that heavy AI spending by customers such as OpenAI could slow if financing pressures emerge. Even so, the firm maintained a buy rating, arguing any shakeout would leave fewer and stronger competitors, with Alphabet in a leading position.
As 2026 begins, Alphabet holds the distinction of being Wall Street’s top-performing megacap of the past year, a status earned through a combination of AI product rollouts, strategic talent acquisitions and favorable legal outcomes that collectively reassured investors about the durability of its core businesses.
Crédito da imagem: Benoit Tessier / Reuters
