This Sleeper AI Stock Is Primed for a Bull Run—Don’t Miss Out

Wall Street's sleeping on an AI gem—while they chase hype, this under-the-radar play quietly stacks gains.

The stealth AI disruptor

Forget the Magnificent Seven—this stock's AI moat could outlast them all. No flashy headlines, just ruthless execution as legacy players scramble to keep up.

Numbers don't lie

While analysts obsess over Nvidia's P/E ratio, this contender's revenue growth tells the real story. Triple-digit adoption rates meet profit margins that'd make a SaaS CEO blush.

The cynical take

Sure, your portfolio manager will 'discover' this stock right after it pumps 300%—just in time to claim genius hindsight. Meanwhile, the smart money's already loading up.

Image source: Getty Images.

Google Search is still growing despite rising competition

Alphabet is the parent company of many businesses, including Google, YouTube, the Android operating system, and Waymo. While this may sound like a wide reach, a lot of money comes from advertising, specifically from the Google search engine.

There is a fear in the investing community that Google search will be replaced by generative AI, which WOULD be disruptive to Google. However, Google isn't just going silently into the night. It already integrated AI search overviews, which provide a generative AI summary at the top of each result. This feature has become quite popular and is likely enough to bridge the gap between a full AI experience and a traditional search.

In Q2, Google Search's revenue ROSE 12% year over year, which is an acceleration from Q1's 10% growth. That's not a sign of a struggling business unit, so investors should likely be less bearish on Google Search.

Alphabet also has another segment that's thriving in the AI arms race: Google Cloud.

Cloud computing is a growing industry

Google Cloud has been one of Alphabet's fastest-growing divisions over the past few years. Cloud computing is seeing two major tailwinds driving its growth: a general MOVE to the cloud for business workloads and AI workloads. Google Cloud had a phenomenal Q2, with revenue rising 32% year over year and its operating margin improving from 11.3% last year to 20.7% this year.

The cloud computing industry is expected to continue growing rapidly for the foreseeable future, with Grand View Research forecasting the market to grow from $752 billion in 2024 to $2.39 trillion by 2030. That's a huge expansion, and Google Cloud's third-place position in the industry will allow it to continue grabbing market share.

Alphabet is clearly doing quite well, but what makes it underrated?

Alphabet's stock is quite cheap compared to the S&P 500

Despite Alphabet's success, it still trades at a discount to the broader market, as measured by the. Alphabet is trading for 20.2 times forward earnings compared to the S&P 500's 23.7.

GOOGL PE Ratio (Forward) data by YCharts

Because of its hefty discount to the market, investors likely expect Alphabet to underperform the market. However, Alphabet has continuously displayed strong growth over the past few years, and the fears many investors had regarding its base business are being disproven each quarter.

The reality is that Alphabet is a strong contender in the AI arms race and has a leading generative AI model in Gemini. With other strong businesses under Alphabet's umbrella, it makes for a strong company that's built to weather any economic situation. I think it's an excellent buy at these levels, and won't be surprised to see it be one of the top-performing stocks over the next five years.