At its annual Google I/O conference on May 20, Alphabet (GOOGL) unveiled “Google AI Ultra,” a $249.99-per-month subscription offering exclusive access to the company’s most advanced artificial intelligence (AI) tools and experimental features. Marketed as a VIP experience, the plan includes Google’s latest AI models like Gemini 2.5 Pro with “DeepThink” mode, the video generation tool Veo 3, and AI filmmaking and podcasting apps.

This move signals Alphabet’s strategic push to diversify revenue beyond advertising and position itself as a leader in the rapidly evolving AI space. 

With Google AI Ultra aimed at high-end users and creators, does this ambitious rollout present a compelling case for investors to double down on GOOGL?

About Alphabet Stock

Headquartered in Mountain View, California, Alphabet (GOOGL) has redefined technology with operations spanning Google Services, Google Cloud, and ventures like Waymo and Verily. Plus, the company’s strategic investments in AI and cloud computing continue to fuel its expansion and bolster its position in the industry. With a market cap of $2.1 trillion, Alphabet remains the global tech powerhouse, standing tall among the “Magnificent Seven.” 

Alphabet’s stock took a hit early this year, sliding nearly 9% in the YTD as global uncertainties and AI rivals tightened the squeeze. But the stock bounced back hard, rallying 7.3% in the last month alone. The spark has been new advanced AI tools and the launch of Google AI Ultra, reigniting investor confidence and reminding the market who is still running the show.

Alphabet’s Q1 Results Surpassed Projections

Alphabet posted robust financial results for the first quarter of 2025 on April 24, showcasing significant growth across its core business segments and boosting the stock price. The company’s revenue grew 12% year over year to $90.2 billion, surpassing analysts’ expectations by 1.2%, driven by strong performances in Google Search, YouTube ads, subscriptions, and Google Cloud services.

Notably, Google Cloud revenue surged 28% annually to $12.3 billion, reflecting heightened demand for AI infrastructure and generative AI solutions. Adjusted EPS soared 49% year over year to $2.81, beating estimates by 39.1%. These results underscore Alphabet’s effective integration of AI technologies across its platforms, including the rollout of Gemini 2.5 and the widespread adoption of AI Overviews in Search, which now serves over 1.5 billion users monthly.

Alphabet is increasing its investments in AI substantially for 2025, with the $75 billion commitment to enhance its AI and cloud infrastructure. The investment will primarily target the expansion of data center capacities and the development of AI services, notably the advancement of its Gemini model. Despite macroeconomic uncertainties, including potential tariff impacts, Alphabet remains steadfast in its commitment to this investment, underscoring the strategic importance of AI to its future growth.

Analysts monitoring Alphabet remain optimistic, predicting EPS to be around $9.47 for fiscal 2025, up 17.8% year over year, before surging by another 8.5% annually to $10.27 in fiscal 2026.

What Do Analysts Expect for Alphabet Stock?

Alphabet came out swinging after the I/O keynote, lighting up Wall Street with its bold AI push and the unveiling of its premium AI Ultra service. JPMorgan liked what it saw, calling Google well-positioned for the AI search war, rating it “Overweight” with a $195 target. Morgan Stanley and Citi echoed the bullish sentiment with $185 and $200 targets, respectively.

Wall Street is majorly bullish on GOOGL. Overall, the tech stock has a consensus “Strong Buy” rating. Of the 52 analysts covering the stock, 41 advise a “Strong Buy,” three suggest a “Moderate Buy,” and the remaining eight analysts are on the sidelines, giving it a “Hold” rating. 

The average analyst price target for GOOGL is $200.65, indicating potential upside of 16%. The Street-high target price of $240 suggests that the stock could rally as much as 40%.