Google stock wraps best year since 2009 as AI excites Wall Street

Google ends 2025 with its strongest performance after a difficult start to the year — From Wall Street’s perspective — Since 2009, when the company’s shares doubled after the financial crisis.

alphabet Shares are up 65% for the year, slightly ahead of their gains in 2021. Shares hit a 2025 low in April after President Donald Trump threatened massive tariffs on trading partners, but they have since rallied over 100%.

Among the eight tech companies valued at more than $1 trillion, Alphabet had by far the biggest gain. The next steepest rise came from chip makers broadcom And Nvidiaincreased by 49% and 39% respectively.

Getting to this point has required Google to belittle skeptics about whether the search giant can maintain its dominance in the age of artificial intelligence. Google’s business model has been seen as the target of a major shift, with OpenAI’s ChatGPT and Sora services capturing increasing amounts of consumer engagement and concerns revolving around the future of online advertising in a world full of AI chatbots and agents.

Alphabet’s 18% decline in the first quarter was the stock’s worst since mid-2022.

However, the mood began to improve in the second quarter. In April, the company promoted 16-year company veteran Josh Woodward to run the Gemini app, Google’s answer to ChatGPT.

In August, Woodward’s group launched image generator Nano Banana, a Gemini feature that allows users to tap AI to create images. The feature went viral at launch, with people using it to create personal digitized figurines by combining multiple photos. By the end of the following month, the Gemini app surpassed 5 billion images and dethroned OpenAI’s ChatGPT at the top of the Apple App Store.

Google’s AI talent pool deepened over the summer when the company announced a deal to hire Varun Mohan, co-founder and CEO of AI coding startup Windsurf, and other senior research and development employees of the high-profile startup, which was previously in talks with OpenAI for a $3 billion acquisition. That deal fell through, and Google agreed to pay $2.4 billion in licensing fees and compensation to land Windsurf’s top engineers.

Soon after, Google was given a gift in the courtroom.

U.S. District Judge Amit Mehta ruled after Google was found to have an illegal monopoly on internet search despite losing an antitrust case last year. He ruled in September against the harshest consequences recommended by the Justice Department.

While Gemini is still behind ChatGPT in overall usage, it is quickly gaining ground. According to this month’s data SimilarwebChatGPT’s share of productive AI traffic dropped to about 68% from 87% the previous year, while Gemini jumped from about 5% to roughly 18% during this period.

The critical development for Alphabet isn’t just about Gemini, but the impact of the company’s AI investments on its core search business, analysts at Citizens wrote in a report published Tuesday.

AI Overviews is Google’s search built-in service that provides AI-powered summaries of user queries. “The inclusion of updated models increases the relevance of the responses, which we believe will further increase engagement,” Citizens analysts said.

“We believe Google can further increase search revenue in 4Q25, which we see as the most important question in the near term,” wrote analysts, who recommend the shares to be bought even after the recent rise.

Analysts also highlighted Google’s broad strength in cloud computing. Amazon Web Services and Microsoft Azure and the company’s leadership in robotaxi through Waymo are seen as potential catalysts heading into 2026.

Still, expectations are skyrocketing as investors flock to the stock. Analysts are predicting a 15% increase in fourth-quarter revenue growth to more than $111 billion when Alphabet next reports results, according to LSEG, with growth expected to be in the low teens through next year.

In October, Alphabet raised its capital spending forecast for 2025 from $85 billion to $93 billion. Analysts predict this figure will rise to more than $114 billion in 2026, according to FactSet.

CEO Sundar Pichai has repeatedly said the company is responding to growing demand. Google’s cloud business has signed more than $1 billion worth of deals through the third quarter of 2025, compared to the previous two years combined, it said in its October earnings call.

Analysts at Pivotal Research warned in a note to clients earlier this month that if OpenAI, one of Google’s major customers, cuts spending or faces other problems due to its mounting liabilities, “it’s likely to get pretty ugly temporarily for AI stocks and the market in general.”

But Pivotal analysts have a buy rating on the stock and raised their price target by $50 to $400; That’s about 28% above Wednesday’s closing price of $313.

“We believe that, if it occurs, the shakeup will mirror the year 2000 and will inevitably be a healthy process of weeding out, led by GOOG, leaving behind fewer, much more dominant competitors,” they wrote.

— CNBC’s Jennifer Elias contributed to this report.

WRISTWATCH: Alphabet stands out as market reprices AI app