Geoffrey Seiler, The Motley Fool

Sat, May 31, 2025, 1:30 AM7 min read

• Investors' worries that AI could disrupt search have sent Alphabet shares to a very attractive valuation.

• However, many investors miss the inherent advantages that Alphabet has.

• Meanwhile, Google Cloud and Waymo have the potential to be huge businesses.

• 10 stocks we like better than Alphabet ›

One stock that divides many investors at this time is Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). A big reason some investors are bearish on the name is that they believe artificial intelligence (AI) will disrupt its highly profitable search business. While certainly a risk, I don't think that is going to happen.

Let's look at four reasons why I'm bullish on the stock to the point where I would recommend buying it like there is no tomorrow.

AI is potentially one of the biggest technological advancements of our generation. However, while it is very good at many things, there is good reason to believe that AI chatbots won't replace search. Cost is one main issue. Running AI queries is much more costly than search queries, which is why there are often limits placed on the number of queries someone can run, and paid tiers.

Investors recently got a peek into the amount of money that AI search start-up Perplexity AI is losing for trial users and users on its free tier, as the company spends heavily on third-party AI models and cloud computing services. Meanwhile, OpenAI said that it loses money on its $200-per-month ChatGPT Pro plan. In addition, there will continue to be a large number of people who will not spend money on AI and prefer free, ad-supported search.

And when it comes to ad-supported search, whether it be powered by AI or regular search, Google has established a wide moat through its distribution and ad network advantages. The company's search engine is preinstalled and the default engine for billions of devices. Its Android operating system has about a 70% market share in the smartphone market, while its Chrome browser has a 66% market share. Both use Google as their default search engine.

Meanwhile, it has a revenue-sharing deal with Apple to be the default search engine on its devices through Safari, which helps it capture much of the rest of the market. It even has revenue-share deals with other browsers, such as Opera, to be their search engine.

At the same time, Alphabet has created one of the largest ad networks on the planet. Early on, the company built up its ability to serve local markets through location-based ad targeting and letting local businesses create free listings to improve their presence on search. Meanwhile, its self-service platform makes it easy for local businesses to run campaigns themselves. With a huge user base, Alphabet can connect advertisers with consumers on everything from a global to a local level.