What’s Behind The 135% Rise In Alphabet Stock?

With a 65% surge in 2025, Google stock (NASDAQ: GOOGL) was the top-performing MAG 7 stock, crushing the S&P 500’s 16% gain. Look back to early 2024, and the picture gets even better: the stock has rocketed 135% since then.

What powered this rally?

Three factors explain the 135% surge:

1. Valuation expansion drove 82% of the gain—the price-to-sales ratio jumped from 5.7x to 10.3x.
2. Revenue growth contributed another 25%, with sales climbing from $307 billion to $385 billion.
3. Share buybacks added the final 3%, with Google repurchasing over $160 billion worth of stock since 2023, reducing shares outstanding by 3%.

We’ll examine these drivers in more detail. Check out our dashboard on Why Google Stock Moved for more information. Also, if you seek an upside with less volatility than holding an individual stock like GOOGL, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell 2000, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Photo by CCheminot on Pixabay

Where’s the revenue growth coming from?

Google Cloud has emerged as a powerhouse, with revenue surging 28-35% year-over-year throughout 2024 and 2025. The company ended September 2025 with Cloud and YouTube on a combined $122 billion annual revenue run rate. Search advertising grew 12-15% year-over-year in recent quarters, boosted by AI-powered features. AI Overviews and AI Mode contributed to increased query growth, while YouTube ad revenue jumped 12-16% lately, with Shorts revenue per watch hour now comparable to traditional in-stream ads in the U.S. Our dashboard on Google Revenue Comparison has more details.

Why are investors paying up for Google?

AI integration is delivering results—businesses using Google’s Demand Gen campaigns saw an average 26% year-over-year increase in conversions per dollar spent. Google Cloud’s backlog hit $155 billion in Q3 2025, with the company signing as many billion-dollar deals in the first half of 2025 as in all of 2024. Executives say first-time commitments from new Cloud customers in 2024 more than doubled from 2023.

Profitability has surged alongside revenue growth. Net margins expanded from 24% in 2023 to 32.2% over the last twelve months, driving strong earnings growth and boosting investor confidence in the company’s ability to convert AI investments into bottom-line results.

Regulatory tailwinds also helped. While Google was found to hold an illegal monopoly in search in mid-2024, Judge Amit Mehta ruled in September 2025 against the most severe remedies, rejecting a forced sale of Chrome. Google was instead ordered to end exclusive default contracts and share some search data with competitors—a far lighter outcome than many feared.

So, should you buy at $330?

Here’s the problem: Google stock looks expensive by historical standards. At 10x price-to-sales, the valuation is 67% above its five-year average of 6x. But the AI opportunity could justify higher multiples. If you believe Google will successfully monetize its massive infrastructure investment, current levels might prove reasonable.

What are the risks?

Google amplifies market volatility. During the 2022 inflation scare, it dropped 44.6% while the S&P 500 fell just 25.4%. Earlier in 2025, trade war fears triggered another 30% Google selloff versus 19% for the broader market. See – How Low Can Google Stock Really Go – for more details.

The bigger uncertainty: return on investment. Google spent $52.5 billion on CapEx in 2024, up 63% from 2023. The company raised its 2025 CapEx guidance to $85 billion midyear, then again to $91-93 billion in October, with executives promising “a significant increase” in 2026. That’s over $145 billion in two years—potentially more depending on the final 2025 numbers. What if these massive investments don’t deliver the expected returns?

Regulatory risks haven’t disappeared either. A separate antitrust case about Google’s advertising business also found Google guilty, with remedies still pending that could force a breakup of the ad-tech business.

The bottom line

Google delivered in 2025 and has built genuine AI advantages. While the valuation is elevated, AI-driven growth across Cloud, Search, and YouTube could justify premium pricing. But brace for volatility—30-40% drawdowns seem to happen every couple of years. If you can stomach those swings and believe in the long-term AI story, current levels could work for patient investors seeking robust long-term gains.

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