Big numbers seem to be the order of the day when it comes to discussions of AI. Alphabet (NASDAQ:GOOG) has been one of the major contributors on both sides of the ledger.
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The company is now consistently generating more than $100 billion in sales a quarter, with AI playing a starring role. “Our AI investments and full stack approach are lighting up every part of the business,” celebrated CEO Sundar Pichai at the time of its last earnings release.
Huge figures certainly make it easier to digest the megabucks that Alphabet is devoting to building out its AI capabilities. On that score, the company recently raised its expected capex for FY2026 to a range of $180 and $190 billion, a hefty chunk of change.
As the market’s appetite for risk has improved, the company’s share price has enjoyed a nice little bull run. After a March dip, GOOG has surged by over 40% over the past few weeks.
Though top investor Daniel Sparks doesn’t think it’s too late to jump on board GOOG, he does offer some words of caution.
“For those starting positions today, it may make sense to begin small and leave room to add on pullbacks,” shares the 5-star investor, who is among the top 1% of stock pros covered by TipRanks.
Sparks is high on Alphabet’s integral involvement in AI infrastructure. He cites the company’s growing Google Cloud revenues, which “surged” by 63% last quarter to hit $20 billion, as well as its $462 billion backlog, which practically doubled quarter-over-quarter.
And it wasn’t just sales that were increasing, adds Sparks. He points out that Google Cloud’s operating income tripled year-over-year to reach ~$6.6 billion, while its operating margin also expanded from 17.8% to 32.9%.
Alphabet is “executing about as well as growth investors could reasonably hope,” states Sparks.
On the other hand, Sparks acknowledges that GOOG’s recent run has pushed its valuation up to a forward price-to-earnings ratio in the high twenties. That doesn’t leave “much room for error.”
Still, for investors with longer-term horizons, Sparks believes Alphabet is a buy, especially “for growth investors looking for AI infrastructure exposure in 2026.” (To watch Sparks’ track record, click here)
Wall Street continues to press forward. With 11 Buys and nary a Hold or Sell, GOOG storms out to a Strong Buy consensus rating. Its 12-month average price target of $436.88 points to an upside approaching 10%. (See GOOG stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.