Google stock heads for best year since 2009 as AI excites Wall Street

After a tough start, Google ended 2025 with its strongest performance from a Wall Street perspective since 2009, when the company emerged from the financial crisis and its stock doubled.

of the alphabet The stock is up 65% since the beginning of the year, slightly outpacing 2021’s gains. The stock hit a 2025 low in April as President Donald Trump threatened to impose massive tariffs on trading partners, but has since soared more than 100%.

Among the eight tech companies valued at more than $1 trillion, Alphabet was by far the biggest gainer. Chipmakers were the next biggest risers. broadcom and Nvidiaincreased by 49% and 39%, respectively.

To get to this point, Google has had to face off against skeptics who question whether the search giant can maintain its edge in the age of artificial intelligence. Google’s business model was seen as a major target for disruption as OpenAI’s ChatGPT and Sora services increased consumer engagement and concerns swirled about the future of online advertising in a world of AI chatbots and agents.

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

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

In August, Woodward’s group debuted the image generator Nano Banana, a Gemini feature that allows users to generate images using AI. This feature became popular at the time of its launch as people used it to blend multiple photos together to create personal digitized figurines. By the end of the next month, the Gemini app had surpassed 5 billion images and snatched the top spot in Apple’s App Store from OpenAI’s ChatGPT.

Google’s AI talent pool deepened over the summer, with the company announcing an agreement to bring in Varun Mohan, co-founder and CEO of AI coding startup Windsurf, and other senior R&D employees from the hot startup, which was previously in talks with OpenAI for a $3 billion acquisition. The deal fell apart, and Google ultimately agreed to pay $2.4 billion in license fees and compensation for Windsurf’s top engineers.

Shortly after, Google was handed a gift in court.

Despite losing an antitrust lawsuit last year that found Google had an illegal monopoly on internet search, U.S. District Judge Amit Mehta ruled in September against the most severe penalty proposed by the Justice Department.

Google may be able to continue paying because it doesn’t have to sell Chrome and can continue to pay companies to preload their products. apple iPhone’s default search engine costs billions of dollars. One consequence of this ruling is that Google will have to share certain data with its competitors.

The momentum of Gemini is the biggest topic.

Last month, Google announced Gemini 3, an upgraded AI model, nearly eight months after launching Gemini 2.5.

In terms of overall usage, Gemini still lags behind ChatGPT, but is quickly gaining ground. According to this month’s data from Samelweb, ChatGPT’s share of generated AI traffic has fallen to about 68% from 87% a year ago, while Gemini has jumped from about 5% to about 18% in that time.

Analysts at Citizens wrote in a report Tuesday that the key development for Alphabet is not just about Gemini, but the impact the company’s AI investments will have on its core search business.

AI Overviews is Google’s embedded search service that provides AI-powered summaries of your queries. Analysts at Citizens said, “With the introduction of the latest model, answers are becoming more relevant, and we believe this will provide an additional tailwind for engagement.”

“We believe Google can further accelerate its search revenue in Q4 2025, which we view as the key near-term issue,” the analysts wrote, recommending the stock to be a buy even after the recent rally.

Analysts also highlight Google’s broad strengths in cloud computing, which Google is chasing. Amazon Web services and microsoft Azure, and the company’s leadership in robotaxis through Waymo, serve as potential catalysts for 2026.

Still, expectations are sky high as investors flood into the stock. Analysts expect Alphabet’s fourth-quarter revenue to rise 15% to more than $111 billion when it releases its next earnings report, with overall growth expected to be in the low teens next year, according to LSEG.

In October, Alphabet raised its 2025 capital spending forecast to as much as $93 billion from $85 billion. Analysts expect that number to jump to more than $114 billion by 2026, according to FactSet.

CEO Sundar Pichai has repeatedly said the company is responding to a surge in demand. He said on an October earnings call that Google’s cloud business has signed more deals worth more than $1 billion through the third quarter of 2025 than in the previous two years combined.

Analysts at Pivotal Research warned in a note to clients earlier this month that if OpenAI, one of Google’s major customers, were to cut spending or face other challenges due to increased obligations, “this would likely result in a significantly challenging temporary environment for AI stocks and the broader market.”

However, Pivotal analysts rate the stock a “buy” and raised their price target by $50 to $400, about 28% above Wednesday’s closing price of $313.

“We believe that if the cull were to materialize, it would mirror the year 2000 and would inevitably be a healthy weeding process, with GOOG leading the way and fewer far more dominant competitors,” they wrote.

—CNBC’s Jennifer Elias contributed to this report.

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