Alphabet (NASDAQ:GOOG | GOOG Price Prediction) shares are making a strong case for why they could be the biggest AI bargain on the market right now, now hovering at around 17.3 times trailing price-to-earnings (P/E). With Google Gemini quietly hitting the 1 billion monthly active users (MAUs) mark, it certainly feels like much of Wall Street is drastically discounting the company’s ability to monetize the technology.
Of course, the company has seen top AI talent depart of late, and it is facing delays with the Gemini 3.5 Pro model, which is nowhere to be seen two months after its expected arrival; questions linger as to whether everything is all right with the company’s AI trajectory.
Despite the delays, the management shuffling over at Google DeepMind, and the untimely key person departures, Google remains an AI force that’s bound to find its way back to the top three. When Gemini’s latest Pro model finally does release, I do think Alphabet shareholders will be able to breathe easy again after a turbulent past couple of months.
It’s more than just smarts; Google Gemini has mindshare, speed, and value down
In my view, Google’s vast distribution moat and huge chunk of mindshare could buy it more than enough time to get the next model out the door, even if it means extending the delay by another several months. At the end of the day, Google is so close to the average user, whether it’s via Google Search (which hasn’t faded at the hands of AI as initially feared) or AI Mode, or a Gemini Plus or Pro subscription bundled with storage or other software.
Combined with its TPU advantage, perhaps Google is the AI innovator that can drive down token costs and chatbot response times far faster than its rivals. Of course, it’s getting tougher to top Anthropic or OpenAI in smarts, but I’d argue that Google really doesn’t have to if it can continue to stay at the top when it comes to value (shooting for the smarts of an American frontier model while aiming for costs similar to that of an open Chinese model?), speed, and, perhaps most importantly, closeness to the user.
The company doesn’t need to force a Gemini button onto a keyboard when most people already have Google Search as the default page that opens when they launch their browser. With Gemini on Android and the AI licensing deal with Apple (NASDAQ:AAPL) factored in, it’s clear that Google is touching mobile AI in some way or another. Whether it’s the latest Gemini on Android or a distilled version from Apple, it’s clear that Google’s distribution moat is incredibly far-reaching.
Could it be that Google Gemini could quickly become the default AI of everyday users?
Who knows. OpenAI might be shedding share, but as the AI wars move to value (smarts per dollar paid per month), I do think that the odds tilt heavily in Google’s favor. At the end of the day, distribution moats and mindshare might matter just as much, if not more so, than having a few extra points for coding and reasoning benchmarks or costing a few cents less per X number of tokens.
Any way you look at it, I view the latest 1 billion MAU milestone as a signal that Google is still very much on the right track with AI. If anything, retaining such an impressive share, even amid a roadbump in its roadmap (model delays and key departures), signals that its moat extends far beyond where the latest Gemini model stands in the large language model (LLM) benchmarks.
Of course, the bigger story, at least for investors, is that Google is pouring an unprecedented sum (as much as $205 billion for this year) into CapEx to advance AI. While ROIs matter, it feels like investors don’t want to wait, as hyperscalers may still be scratching the surface on the AI infrastructure buildout, which feels more energy-constrained than chip-constrained.
The bottom line
As Google Cloud looks to hit an inflection point down the road, while Gemini looks to make up for lost time (Gemini 3.7 Flash has proven incredibly capable as we all await 3.5 Pro) and the firm seeks to win the AI value wars, perhaps Google remains the far better bet than OpenAI or even Anthropic.
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