Google is intensifying its data center expansion to meet the surging demand for artificial intelligence (AI) services. This strategic move comes as Alphabet’s shares have soared 67% over the past six months, reflecting the company’s increasing competitiveness in the AI sector compared to rivals like OpenAI.
As Alphabet prepares to report its third-quarter earnings on October 29, expectations are high. Revenue for Q3 is projected to rise by 13% year-over-year, slightly down from the 14% growth reported in the previous quarter. This continued growth illustrates how AI is enhancing Google’s core services, particularly in search, while driving robust demand for Google Cloud services.
In the second quarter, Google Cloud saw operating profit surpassing year-over-year figures, more than doubling as enterprise interest in AI solutions grows. Management has indicated that they will increase capital expenditures to expand data center capabilities significantly. Although the financial returns from these investments may take a few years to materialize, they reveal Google’s commitment to sustaining demand in both cloud computing and AI services for the long term.
Trading at just 24 times next year’s earnings estimates, Alphabet presents a promising investment opportunity. With an accelerating demand for AI and expectations for another better-than-expected earnings report, there is a strong belief that the stock could rise further as we approach 2026. Investors positioned now could potentially gain impressive returns over the next five years, indicating a positive outlook for the company and its shareholders.