Alphabet Hits New High On AI Chip Sales News. Is Google Stock A Buy?

Core Insights - Google is positioned as a leader in the artificial intelligence sector, with significant stock gains and a strong earnings report for Q3 2025, reflecting a 35% increase in earnings per share to $2.87 and a 16% rise in gross revenue to $102.35 billion [5][4] - The competition from OpenAI and other AI-driven platforms is prompting Google to innovate its search results and enhance its AI capabilities, particularly with the upcoming launch of the Gemini 3 model [4][3] Financial Performance - Google's Q3 earnings per share rose 35% to $2.87, while gross revenue increased 16% to $102.35 billion, surpassing analyst expectations [5] - Internet search-advertising revenue grew over 14% to $56.57 billion, exceeding estimates of $55.05 billion [5] - Cloud-computing revenue climbed 33.5% to $15.16 billion, also above the forecast of $14.70 billion, with a significant order backlog increase of 82% year-over-year to $155 billion [7] Strategic Developments - Google plans to increase its 2025 capital spending estimate by 8% to $92 billion, primarily focused on AI cloud infrastructure [6] - The introduction of AI Overviews in search results has attracted over 1.5 billion monthly active users, indicating a shift in user engagement [11] - Google is enhancing its Chrome browser with native Gemini access, allowing users to analyze information without switching windows [9] Competitive Landscape - OpenAI's ChatGPT has over 800 million weekly active users, creating competitive pressure on Google, which has over 650 million monthly average users for its Gemini app [3] - Google's proprietary TPU technology is emerging as a competitor to Nvidia's offerings, potentially strengthening its position in the AI hardware market [8] Regulatory Environment - A recent federal ruling alleviated some antitrust concerns for Google, allowing it to avoid asset divestitures related to its internet search business [10] - However, ongoing digital advertising antitrust cases may pose future challenges, with potential remedies including the sale of Google Ad Manager [10]