Google CEO Sundar Pichai waves as he arrives to attend the Artificial Intelligence (AI) Action Summit at the Grand Palais in Paris, France, February 11, 2025.
Benoit Tessier | Reuters
After a tough start to the year, Google closed out 2025 with its strongest performance — from Wall Street’s perspective — since 2009, when the company’s shares doubled coming out of the financial crisis.
Alphabet’s stock popped 65% for the year, slightly ahead of its gains in 2021. The shares hit their 2025 low in April, as President Donald Trump was threatening massive tariffs on trading partners, but they’ve since jumped over 100%.
Among the eight tech companies valued at over $1 trillion, Alphabet was by far the biggest gainer. The next sharpest rallies came from chipmakers Broadcom and Nvidia, which gained 49% and 39%, respectively.
Alphabet vs. the Nasdaq in 2025
Getting to this point required Google to stare down the skeptics, who questioned whether the search giant could maintain its dominance in the artificial intelligence era. With OpenAI’s ChatGPT and Sora services capturing an increasing amount of consumer engagement and concerns swirling around the future of online advertising in a world of AI chatbots and agents, Google’s business model was viewed as a target for major disruption.
Alphabet’s 18% plunge in the first quarter was its worst period for the stock since mid-2022.
But the mood started to improve in the second quarter. In April, the company promoted 16-year company veteran Josh Woodward to run the Gemini app, Google’s answer to ChatGPT.
In August, Woodward’s group debuted image generator Nano Banana, a Gemini feature that lets users turn to AI to generate images. The feature went viral at launch when people used it to blend multiple photos together to create personal digitized figurines. By the end of the following month, the Gemini app surpassed 5 billion images and dethroned OpenAI’s ChatGPT at the top of Apple’s App Store.
Google’s AI talent pool deepened over the summer, when the company announced an agreement to bring in Varun Mohan, co-founder and CEO of AI coding startup Windsurf, along with other senior research and development employees from the high-profile startup that had previously been in talks with OpenAI for a $3 billion acquisition. That deal fell apart, and Google ended up agreeing to pay $2.4 billion in licensing fees and for compensation to snag Windsurf’s top engineers.
Winning in AI and in court
Soon thereafter, Google was handed a gift in the courtroom.
Despite losing its antitrust case last year, as Google was found to hold an illegal monopoly in internet search, U.S. District Judge Amit Mehta ruled in September against the most severe consequences that were proposed by the Justice Department.
Google would not have to divest Chrome and could still make payments to companies to preload products, meaning it could continue paying Apple billions of dollars to be the default search engine on iPhones. One consequence of the ruling is that Google would have to share certain data with competitors.
Gemini’s momentum has been the biggest story.
Last month, Google announced Gemini 3, an upgraded AI model, almost eight months after rolling out Gemini 2.5.
While Gemini still trails ChatGPT in overall usage, it’s been rapidly making up ground. According to data this month from Similarweb, ChatGPT’s share of generative AI traffic dropped to about 68% from 87% a year earlier, while Gemini jumped to roughly 18% from about 5% over that stretch.
Analysts at Citizens wrote in a Tuesday report that the critical development for Alphabet isn’t just about Gemini but the effect of the company’s AI investments on the core search business.
AI Overviews is Google’s search-embedded service that provides AI-powered summaries for user queries. The Citizens analysts said the “incorporation of updated models is improving the relevance of answers, which we view as a further tailwind to engagement.”
“We come away believing Google can further accelerate search revenue in 4Q25, which we view as the key question near term,” wrote the analysts, who recommend buying the shares even after the latest rally.
Analysts have also highlighted Google’s broad strength in cloud computing, where it’s chasing Amazon Web Services and Microsoft Azure, and the company’s leadership in robotaxis through Waymo as potential catalysts heading into 2026.
Still, with investors piling into the stock, expectations are sky-high. Analysts project fourth-quarter revenue growth of 15% to over $111 billion when Alphabet next reports results, according to LSEG, and growth throughout next year is expected to be in the low-teens.
In October, Alphabet raised its capital spending forecast for 2025 to as high as $93 billion, up from $85 billion. Analysts see that number jumping to more than $114 billion in 2026, according to FactSet.
CEO Sundar Pichai has repeatedly said the company is responding to soaring demand. He said on the October earnings call that Google’s cloud business signed more deals over $1 billion in 2025 through the third quarter than in the two prior years combined.
Analysts at Pivotal Research warned in a note to clients earlier this month that should OpenAI, one of Google’s key customers, cut its spending or face other issues due to its mounting obligations, “it is likely to temporarily get pretty ugly for AI stocks and the market in general.”
But the Pivotal analysts have a buy rating on the stock and raised their price target by $50 to $400, about 28% above Wednesday’s closing price of $313.
“We believe the shakeout, if it happens, will mirror 2000 and will inevitably be a healthy weeding out process leaving fewer much more dominant competitors, with GOOG leading the way,” they wrote.
— CNBC’s Jennifer Elias contributed to this report.
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