Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) just spent two days putting on a show that even its harshest naysayers have to respect. The 2025 Google I/O keynotes were a relentless parade of new generative‑AI tricks, a revamped “AI Mode” for Search, and a premium Google AI Ultra subscription.
GOOG stock surged almost 3% for the day. Is it time to load up on Alphabet stock before it goes up more?
Google opened with Gemini 2.5 Pro. It is a multimodal model that now tops both WebDev Arena and LMArena benchmarks, and it folded the LearnLM education engine inside that same brainpower. In a single demo, Gemini wrote code, debugged it, and built a full-stack prototype faster than a junior engineer.
The keynote kept escalating as Sundar Pichai also introduced Google AI Ultra. This is a $249.99‑per‑year bundle that unlocks Gemini 2.5 Pro Deep Think, Imagen 4 visual generation, and Flow, which can make films with audio.
The biggest thing that was revealed was the “AI Mode” search. One click switches the familiar results page into a conversational interface that cites sources and lets users refine queries in real time.
There’s a lot more that happened, but this alone is more than enough to get Wall Street to notice.
For two years, pundits insisted that generative AI spelled the end of Google’s dominance. They thought Google would play defense while OpenAI or Perplexity ate its lunch. The last 48 hours flipped that narrative. The new AI Mode sits on top of the world’s largest index, and it keeps Google’s ad pipeline intact.
“We come away more confident that Google can successfully navigate the shift to AI Search,” is what JPMorgan said before reiterating an overweight rating with a $195 price target.
GOOG stock still trades at a 19 times earnings multiple, which is much lower than the 28.55 times PE ratio investors have historically paid. Growth here has remained solid, and Alphabet still has $95.3 billion in cash on its balance sheet vs. $23.56 billion in debt.
Ads remain a cash geyser, Cloud is profitable, and Gemini now looks like the default AI layer for four billion users.
That said, if AI Mode cannibalizes classic search ads faster than it creates new ones, margins could compress. But the risk‑reward balance tilts positively because the market still prices Google like a mature search company when it now looks like the platform leader in generative AI.
As long as cloud growth continues and Google keeps pace, the stock could reach $190 this year, barring any macro shocks. And even if there is a broader market downturn, it already trades at pretty cheap levels historically, so the downside risk is lower than most other mega-cap stocks.
