Google CEO Sundar Pichai Google started 2025 on a weak footing but ultimately delivered its best annual performance on Wall Street since 2009, a year when its stock price doubled following the financial crisis. Alphabet's stock price soared 65% for the full year, a gain slightly higher than that of 2021. In April 2025, the stock hit its annual low after US President Trump threatened to impose massive tariffs on trade partners, but since then, the share price has surged by over 100%. Among the eight technology companies with market capitalizations exceeding $1 trillion, Alphabet's annual gain was significantly ahead of its peers. Chipmakers Broadcom and Nvidia ranked second and third in terms of gains, with full-year increases of 49% and 39%, respectively. Alphabet Class A Stock Real-Time Quote
Google's impressive performance was hard-won, achieved while facing down a chorus of skeptics who had doubted the search giant's ability to maintain its dominance in the AI era. With services like OpenAI's ChatGPT and Sora continuing to capture significant user attention, coupled with concerns about the future of the online advertising industry amid the rise of AI chatbots and agents, Google's business model was perceived to be at serious risk of disruption. Alphabet's stock plummeted 18% in the first quarter of 2025, marking its worst quarterly performance since mid-2022. However, market sentiment began to improve in the second quarter. In April of the same year, Google promoted Josh Woodward, a 16-year company veteran, to lead the Gemini application—a product positioned as Google's core weapon to compete with ChatGPT. In August, Woodward's team launched the image generation tool Nano Banana, a feature within the Gemini app that allows users to generate images using AI. The feature quickly went viral as people used it to blend multiple photos to create personalized digital avatars. By the end of the following month, the total number of images generated by the Gemini app surpassed 5 billion, and it replaced OpenAI's ChatGPT at the top of the Apple App Store download charts. Later that summer, Google further bolstered its AI talent pool. The company announced an agreement to bring on board Varun Mohan, the co-founder and CEO of AI programming startup Windsurf, along with other senior R&D staff from the closely watched startup. Previously, Windsurf had been in talks with OpenAI for a $3 billion acquisition deal, which ultimately fell through. To secure Windsurf's top engineering team, Google agreed to pay a final package of $2.4 billion in licensing fees and related compensation. Victories on Both AI and Legal Fronts Shortly thereafter, Google also scored a victory in the courtroom. Although Google lost an antitrust lawsuit last year and was found to have illegally monopolized the internet search market, US District Judge Amit Mehta ruled in September 2025, rejecting several of the most severe penalties sought by the US Department of Justice. Under the ruling, Google is not required to divest its Chrome browser business and can continue paying other companies to pre-install its products. This means Google can continue paying Apple billions of dollars to maintain its status as the default search engine on iPhones. One requirement of the ruling is that Google must share certain data with competitors. The robust growth momentum of the Gemini app stands out as the biggest highlight of the year. Just last month, Google launched the enhanced AI model Gemini 3, coming less than eight months after the release of its predecessor, Gemini 2.5. Although Gemini's overall user base still trails behind ChatGPT, it is rapidly closing the gap. According to data released this month by web analytics firm Similarweb, ChatGPT's share of traffic in the generative AI sector has fallen from 87% a year ago to approximately 68%, while Gemini's share has jumped from around 5% to about 18%. Analysts at Citi noted in a report released on Tuesday that for Alphabet, the key development lies not only in the Gemini app itself but also in the positive impact of the company's AI investments on its core search business. "AI Overviews" is a service built by Google into its search function, providing AI-generated summaries for user queries. The Citi analysts stated, "The integration of the updated model is enhancing the relevance of search answers, which we believe will further drive user engagement." "Consequently, we believe Google is positioned to further boost search revenue in the fourth quarter of 2025, which we see as the near-term focal point," the analysts wrote in the report. They maintained a Buy rating, expressing continued optimism about the stock's performance even after its recent significant rally. The analysts also emphasized that Google's comprehensive strength in cloud computing should not be underestimated—this business is currently catching up to Amazon Web Services and Microsoft Azure. Furthermore, the leading position of its subsidiary Waymo in the autonomous taxi sector is seen as a potential catalyst for the company's performance in 2026. However, as investors have flocked to the stock, driving up its price, market expectations for Google have also risen considerably. According to London Stock Exchange Group data, analysts predict that when Alphabet next reports earnings, its revenue growth for the fourth quarter of 2025 will reach 15%, with revenue surpassing $111 billion; revenue growth for the full year 2026 is expected to reach the low double-digits. In October 2025, Alphabet raised its capital expenditure forecast for the year to a maximum of $93 billion, up from a previous estimate of $85 billion. According to financial data firm FactSet, analysts expect the company's capital expenditure to climb further to over $114 billion in 2026. Google CEO Sundar Pichai has repeatedly stated that the company's actions are in response to surging market demand. During an earnings call in October, he revealed that the number of deals worth over $1 billion signed by Google Cloud in the first three quarters of 2025 had already exceeded the total from the previous two years combined. Analysts at Pivotal Research warned clients in a note earlier this month: if one of Google's key clients, OpenAI, were to cut spending or encounter other problems due to a worsening debt burden, "AI-related stocks, and potentially the broader market, could face a brief challenging period." Nonetheless, the firm maintained a Buy rating on Alphabet and raised its price target by $50 to $400, approximately 28% above the stock's closing price of $313 on Wednesday. The analysts wrote in the report: "We believe that if a market shakeout does occur, the process could resemble the dot-com bubble burst of 2000, and it would ultimately be a healthy industry filtration, leaving behind fewer but stronger competitors, with Google positioned to lead in this process."
