Alphabet Stock Rises as AI, Cloud Deals Advance

December 20, 2025 at 19:15 UTC

6 min read

Alphabet stock rises with Google Cloud deal, AI advances, and Waymo $100B valuation news

Key Points

Alphabet shares hover near record highs after a 60% gain in 2025
Google Cloud signs what is reported as its largest-ever security deal
Google and Meta deepen collaboration to position TPUs against Nvidia GPUs
Waymo funding talks highlight potential $100B-plus valuation inside Alphabet

Alphabet stock near highs as institutions adjust positions

Alphabet Inc.’s shares are trading close to record levels after a strong 2025. Class A shares (GOOGL) opened at $307.16 on Friday, with a 52‑week range of $140.53 to $328.83 and a market capitalization of about $3.71 trillion. The stock trades at roughly 30 times earnings, with a price‑to‑earnings‑growth ratio of 1.75 and a beta of 1.07. Class C shares (GOOG) closed Friday at $308.61, up 1.60% on the day and also near their 52‑week high around $328.67. Institutional ownership remains significant: hedge funds and other institutions hold about 40.03% of Alphabet’s stock. Recent filings show both buying and selling activity. Montecito Bank & Trust initiated a new GOOGL position of 53,372 shares valued at about $12.98 million, making Alphabet its ninth‑largest holding. Veracity Capital LLC increased its stake by 10.3% to 19,575 shares worth $4.76 million, also its ninth‑largest position. Other investors, including Cooper Financial Group, Sendero Wealth Management LLC, StrongBox Wealth LLC and ST Germain D J Co. Inc., reported trimming or modestly adjusting positions, while large asset managers such as Vanguard, Franklin Resources and Arrowstreet Capital added millions of shares earlier in the year.

Cloud growth and a multibillion‑dollar Palo Alto Networks deal

Google Cloud remains a central growth driver for Alphabet. In the third quarter of 2025, Google Cloud revenue rose 34% year over year to $15.2 billion, supported by core products, AI infrastructure and generative AI solutions. The latest catalyst is an expanded partnership with Palo Alto Networks. Reuters reported that the multi‑year Google Cloud–Palo Alto Networks security agreement is “approaching $10 billion,” describing it as Google Cloud’s largest‑ever security services deal, based on a source familiar with the agreement. Palo Alto Networks characterized the arrangement as a broadened collaboration focused on AI‑powered security and deeper cloud integration, designed as a long‑term, product‑driven relationship rather than a one‑off marketing initiative. Industry commentary cited in the reporting notes that the deal comes as Alphabet pursues greater cybersecurity scale, including a pending $32 billion acquisition of Wiz, and as security becomes a key requirement for cloud migrations and AI deployments. The agreement is seen as reinforcing Google Cloud’s positioning not only in compute and AI models but also in enterprise‑grade security integration.

AI chips, Meta partnership and the challenge to Nvidia

Alphabet is also advancing its AI infrastructure strategy through its in‑house Tensor Processing Units (TPUs). Reuters reported that Google is working with Meta on an initiative called “TorchTPU,” aimed at making TPUs better suited to running PyTorch, the widely used open‑source AI framework backed by Meta. The goal is to position TPUs as an alternative to Nvidia’s graphics processing units by improving compatibility for customers whose AI stacks are built on PyTorch. Historically, Alphabet reserved a large share of TPUs for internal use, but it has been discussing with Meta the possibility of Meta using more TPUs. Separate Reuters reporting cited by multiple outlets noted that Meta has explored spending billions of dollars on Google’s chips in future years. Improved PyTorch support is intended to reduce friction for developers, potentially making TPUs less niche and strengthening Google Cloud’s ability to capture AI infrastructure workloads while relying less on third‑party GPUs.

Waymo funding talks and Alphabet’s broader financial profile

Alphabet’s autonomous‑vehicle unit Waymo is again drawing attention inside the group’s valuation. Reuters and Bloomberg reporting referenced in recent coverage indicate that Waymo is in talks to raise billions of dollars, with Bloomberg citing a $15 billion capital raise under discussion from external investors and Alphabet, which could value the business at around $110 billion. Reuters has similarly reported that Waymo is seeking funding at a valuation of at least $100 billion. These discussions come as Alphabet’s overall financial performance remains strong. In the third quarter of 2025, Alphabet reported total revenue of $102.3 billion, up 16% year over year (15% in constant currency). Google Services revenue, which includes Google Search, rose 14% to $87.1 billion, with Q3 commentary elsewhere noting a 15% year‑over‑year increase in Google Search revenue alone. Net income increased 33%, and earnings per share climbed 35% to $2.87, beating consensus estimates of $2.29. Alphabet has guided 2025 capital expenditures to a range of $91 billion to $93 billion, citing demand from cloud customers, and has introduced a quarterly dividend of $0.21 per share, or $0.84 annually, implying a yield of about 0.3% and a payout ratio of 8.28%.

Regulatory backdrop and evolving analyst expectations

Regulatory developments continue to shape the outlook for Alphabet alongside its AI and cloud initiatives. A U.S. federal judge ordered Google to limit contracts that make its search engine and AI app the default on devices to a maximum of one year, potentially requiring more frequent renegotiations. In Mexico, the antitrust authority ruled that Google cannot require mobile device manufacturers to use Android as a condition for access to its services. In Europe, Reuters reported that Google could face an EU fine next year related to allegations it did not sufficiently comply with rules against favoring its own services in search results, while The Verge reported on a new EU antitrust investigation into AI features such as AI Overviews and the use of publisher and creator content. Against this backdrop, Wall Street remains broadly positive but more differentiated. A Nasdaq‑hosted Fintel summary cited an average one‑year price target for GOOG of $317.81, implying low single‑digit upside from recent levels, with targets ranging from $187.30 to $421.02. MarketBeat data for GOOGL show a consensus “Moderate Buy” rating, with four analysts assigning Strong Buy ratings, 41 rating the stock Buy and six rating it Hold, and an average target price of $315.90. Several firms, including TD Cowen, Guggenheim, Citigroup, Wedbush and others, have recently raised their targets, some citing increased usage of Gemini, AI Mode and AI Overviews as potential drivers of future growth.

Key Takeaways

Alphabet’s near‑record share price is supported by double‑digit revenue and earnings growth, but valuation multiples around 30x earnings leave less room for error.
The multiyear, multibillion‑dollar Palo Alto Networks agreement and rapid Google Cloud growth underscore Alphabet’s push to make security and AI infrastructure core revenue pillars.
The TorchTPU collaboration with Meta and potential large‑scale TPU adoption highlight Alphabet’s effort to compete more directly with Nvidia’s AI ecosystem.
Waymo’s pursuit of funding at a valuation above $100 billion illustrates the scale of non‑search assets embedded within Alphabet’s market capitalization.
Regulatory actions in the U.S., Mexico and Europe remain a central risk factor, even as analysts maintain a broadly positive, though more cautious, stance on the stock.