Up Over 25% This Year, Is Alphabet Stock Still a Buy? | The Motley Fool

"Alphabet has been an excellent stock to own so far in 2026. It has risen around 28%, easily outperforming the S&P 500, which is up around 9.6%. The question investors have to ask now is if this run is the start of something bigger, or if this is all Alphabet has left."

"Alphabet is the parent company of Google, which includes several divisions, including Google Search, YouTube, Google Cloud, Chrome, Android, and Gemini. But for most investors, there are really just two business segments to analyze: advertising and artificial intelligence (AI). Advertising is what got Alphabet to where it is today, and is still the primary way it makes money. While advertising is being affected by AI, it's still subject to the market demands of advertising availability and customer acquisition costs."

"Google Search accounts for the lion's share, and it rose an impressive 19% this past quarter. YouTube wasn't the greatest, as it trailed Google Search's strong revenue growth and delivered 11% growth in Q1. Still, investors need to understand that Google Search accounts for the majority of Google's revenue, so as long as it's doing great and the other segments are doing just OK, investors should be happy."

"The majority of Alphabet's AI revenue is being recognized through its Google Cloud business unit. This division is making money through the expansion of its cloud computing resources and by selling its custom-designed AI chips to external clients. Both of these added up to Google Cloud having a great quarter, with revenue rising 63% year over year. Furthermore, its operating margin rose to 33%, a huge gain from last year's 18% margin."

Alphabet has gained about 28% in 2026, outperforming the S&P 500’s roughly 9.6% rise. The company’s main revenue drivers are advertising and artificial intelligence. Advertising remains the primary source of income, with Google Search delivering 19% revenue growth in the past quarter and YouTube growing 11% in Q1. AI revenue is largely recognized through Google Cloud, which benefits from expanding cloud computing resources and selling custom AI chips to external clients. Google Cloud revenue rose 63% year over year, and its operating margin increased to 33% from 18% last year. Overall revenue growth is reported at 22% year over year.

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