Google is rapidly reshaping how investors view its artificial intelligence strategy, moving from being seen as behind rivals to emerging as a clear leader in the AI race. Just a year ago, markets questioned the company’s ability to compete in AI. Today, its confident outlook and strong performance are changing that narrative and strengthening Google’s position against OpenAI.
This renewed confidence followed Alphabet’s latest earnings call, its first since launching the Gemini 3 model. Executives highlighted how AI investments are now driving growth across the entire business, not just within cloud services. CEO Sundar Pichai said, “Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board.” This shift has encouraged Alphabet to consider sharply increasing capital spending in 2026 to between $175 billion and $185 billion to expand AI computing capacity.
Growth is visible in both consumer and enterprise segments. Pichai said the Google Gemini app crossed 750 million monthly active users by the end of the December quarter, up from 650 million in the previous quarter. While this still trails ChatGPT, which had more than 800 million weekly active users as of October, engagement has risen since Gemini 3 launched. “We are also seeing significantly higher engagement per user, especially since the launch of Gemini 3,” he said. Gemini 3 now powers AI Mode in Search and the enterprise Gemini offering, which has reached 8 million paid licenses.
Alphabet’s aggressive spending plans initially unsettled investors, pushing shares down nearly 6% after hours. Sentiment improved quickly as cloud revenue jumped 48% in the December quarter and AI gains spread across other businesses. The stock recovered to trade flat, reinforcing a clear message from markets that heavy AI spending is acceptable only when returns are visible. Since early last year, Alphabet has risen about 36% and now stands alongside Nvidia and Apple among companies valued above $4 trillion.
In contrast, concerns are growing around OpenAI and its partners. Microsoft shares have fallen more than 20% since October, while Oracle is down about 49%, as investors worry about reliance on OpenAI and its ability to fund massive commitments. Analysts say Alphabet’s strong balance sheet and major deals with Meta and Apple have shifted market preference. As one fund manager noted, “I do think there’s a narrative emerging here where the market is favoring Google versus OpenAI.”
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
