Key Points
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Alphabet’s strong growth in search and cloud is driving higher profits.
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Its massive cash reserves fund high-growth bets like Waymo and Gemini.
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The stock trades at a reasonable valuation relative to its current businesses and long-term ventures.
You don’t have to hunt for speculative growth stocks to outperform the S&P 500 index. Looking within the famed benchmark can lead you to plenty of winners that have solid long-term fundamentals.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) may be one of the smartest growth stocks to buy with $3,000. The company is gaining market share in key industries and has high profits and a strong balance sheet that support expansion into new opportunities.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
google headquarters office
Image source: Getty Images.
Alphabet’s opportunities translate to greater profits…
Alphabet is one of many companies investing significant capital and resources in artificial intelligence (AI). Its self-driving Waymo vehicles demonstrate the high potential AI has, but these investments require significant upfront capital before they generate meaningful profits.
This barrier to entry gives Alphabet an incredible advantage since the company has immense profits. For instance, the company reported $132 billion in net income throughout 2025. That figure was up by more than 30% year over year.
The elevated net income is also supported by rising revenue, which was up by 15% year over year throughout 2025. That growth rate accelerated to 18% year over year in Q4 2025.
Alphabet also has $126.8 billion in cash, cash equivalents, and securities. That cash is part of the $206 billion in total current assets.
…as these opportunities expand across high-growth areas
Waymo has the potential to contribute significantly to future revenue growth rates and rising profitability. Alphabet’s Gemini AI model can also generate substantial profits in the long run through its subscription model. Gemini already has more than 750 million monthly active users, making it an important part of Alphabet’s future.
The company is willing to play the long game. For instance, Google Cloud reported its first profitable quarter 15 years after its 2008 launch. Now it’s a key revenue growth engine that delivers impressive profits.
Google Cloud revenue surged by 48% year over year in Q4 as more enterprise AI customers used the platform. The company’s cloud computing segment closed the quarter with $5.3 billion in net operating income, more than doubling its total from last year.
There’s also Google search, which continues to generate the bulk of Alphabet’s total revenue and profits. Google Services revenue increased by 14% year over year to $95.9 billion in Q4.
Some companies are mature and produce reliable financials but have limited growth opportunities. Other companies are in start-up mode, generating high growth rates but continuing to burn through cash.
Those common extremes make Alphabet a rare breed. It’s tapping into high-growth opportunities now while delivering substantial profits for investors. To top it all off, Alphabet trades at a reasonable P/E ratio of 29. That ratio is fair due to Alphabet’s high revenue and net income growth rates.
Should you buy stock in Alphabet right now?
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.