Alphabet closed out 2025 with its strongest stock market performance since 2009, as growing confidence in its artificial intelligence strategy helped it outperform other megacap tech peers. Alphabet shares rose 65% for the year, the biggest gain among companies valued above $1 trillion.
The rally marked a sharp reversal from early 2025, when the stock slumped 18% in the first quarter amid tariff threats from Donald Trump and investor fears that AI rivals could disrupt Google’s core search and advertising business. From an April low, the stock more than doubled by year-end.
Investor sentiment improved as Google accelerated execution around its Gemini AI platform. The Gemini app gained traction after new features went viral and, by late summer, overtook OpenAI’s ChatGPT in Apple’s App Store. Google also strengthened its AI talent bench by bringing in senior engineers from startup Windsurf.
Alphabet received additional relief in September when a U.S. court rejected the most severe remedies in its antitrust case, allowing Google to keep Chrome and maintain key distribution deals, including payments to Apple to remain the default search engine on iPhones.
Analysts say the critical question now is whether AI can accelerate Google’s core search growth. Early signs are encouraging, with AI Overviews improving engagement and Gemini rapidly gaining market share in generative AI traffic, according to Similarweb data.
Looking ahead to 2026, expectations are high. Alphabet is sharply increasing capital spending to meet AI and cloud demand, while analysts remain bullish that Google’s scale across search, cloud and emerging businesses like Waymo positions it as a long-term winner in the AI-driven tech cycle.
