For nearly three decades, Google's parent Alphabet (GOOGL -0.67%) (GOOG -0.74%) has shaped the communications revolution. From leading online search to innovating mobile apps, Alphabet has continued its legacy of innovation into the age of artificial intelligence (AI).

The stock has delivered an impressive 145% return over the past five years; yet, further growth and earnings momentum could still make it a smart bet for investors. Here are 10 reasons Alphabet stock is a great addition to your portfolio today.

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1. AI-powered growth

AI is reshaping the economy, boosting productivity and creativity. Alphabet is uniquely positioned to capitalize on the demand, leveraging vast amounts of user data across its diverse platforms to develop cutting-edge AI models such as Gemini.

Alphabet's AI capabilities enhance the user experience while driving efficiency in its core advertising algorithms. Significant investments in AI infrastructure, including custom chips, should ensure Alphabet stays at the forefront of a major growth opportunity.

2. Google search leadership

Alphabet's AI prowess is evident in the company's flagship Google Search service, which commands over 90% of the global search market. Its AI-driven features are improving ad targeting and conversion performance.

In the first quarter, Alphabet posted net revenue growth of 12% on a year-over-year basis, with Google Search increasing 10%. This tailwind has propelled profitability. Earnings per share (EPS) of $2.81 soared 49% compared to the prior-year quarter, suggesting the business is as relevant as ever.

3. Video streaming dominance

Another cornerstone of Alphabet's business is YouTube. The video streaming platform now counts 2.7 billion monthly active users, having evolved into a broader social media ecosystem. The company has seen significant traction in subscription services such as YouTube Premium and YouTube TV, diversifying revenue beyond ads. Alphabet's internet video dominance provides a competitive edge within the tech space.

4. Cloud computing momentum

Fueled by the data-intensive requirements of AI, Google Cloud has also been a key growth driver for Alphabet, capturing market share from competitors like Amazon Web Services (AWS) and Microsoft Azure. Demand for Alphabet's cloud computing enterprise solutions, including AI-driven tools and robust data analytics platforms, drove annual segment revenue growth of 28% in the first quarter.

This development is important given concerns that ongoing regulatory scrutiny might force the company to sell off certain businesses, like the Chrome operating system. Alphabet's newfound AI-powered cloud growth provides a solid foundation for sustained success.

5. Strong profitability and free cash flow

Alphabet's strong Q1 2025 performance sets the stage for continued growth, with Wall Street forecasting full-year revenue to rise 11% and EPS to reach $10.34, a 29% jump from 2024. These robust financial trends underscore Alphabet's investment appeal.

6. A compelling valuation

Even considering its dominance in search, cloud, and AI, Alphabet remains attractively valued compared to other tech giants. Its forward price-to-earnings (P/E) ratio of around 18 stands out as a relative bargain next to "Magnificent Seven" peers like Amazon, Apple, Meta Platforms, Microsoft, and Nvidia, which trade at an average forward P/E closer to 32. This valuation makes Alphabet stock a compelling choice for long-term investors.

GOOGL PE Ratio (Forward) data by YCharts.

7. A resilient macroeconomic backdrop

Despite a delicate global geopolitical environment, resilient economic conditions bode well for Alphabet's overall business, including demand for online advertising and AI solutions. Its digital-first business model is relatively insulated from tariff concerns, offering investors some confidence in the company's outlook.

8. Autonomous driving opportunity

Alphabet's self-driving subsidiary, Waymo, is leveraging the company's AI expertise with a first-mover advantage in robotaxi operations. Industry experts estimate Waymo could capture 10% of the U.S. ride-share market by 2030, a multibillion-dollar opportunity, and a valuable asset within Alphabet's portfolio.

9. Quantum computing investments

There's considerable excitement regarding recent breakthroughs in quantum computing, seen as the next frontier of technology, and Alphabet is investing in the field. In 2024, it announced its Willow quantum processor, which it said achieved "quantum supremacy" by performing complex calculations far beyond the reach of traditional supercomputers. Considering its potential to revolutionize fields like cryptography, simulations, materials science, and AI, Alphabet could unlock significant new revenue streams over the next decade.

10. Global expansion

Alphabet's worldwide presence is growing, as it taps into emerging markets like Africa, India, and Southeast Asia, where internet adoption is surging with billions of new users. Its platforms, including AI initiatives, are well-suited to engage this expanding audience, positioning Alphabet to reward shareholders over the long run.