Alphabet has spent years defending its search empire while rivals grabbed the early spotlight in generative AI. Now the company is turning that caution into a full‑throttle push, using its balance sheet and distribution muscle to move ahead of OpenAI in both model adoption and commercial traction. The shift is reshaping how investors, developers, and competitors think about the next phase of the AI race.
Google’s latest results show AI is no longer a side project but the organizing principle of the business, from Gemini in the cloud to experimental features in Google Search. The company is betting that scale, not restraint, will decide who leads the next decade of computing, even as that strategy tests investor patience and exposes lingering product risks.
From laggard narrative to AI front‑runner
For much of the past two years, Alphabet was cast as the incumbent that moved too slowly while OpenAI and its backer Microsoft seized the narrative. That perception is now colliding with a different reality, as Alphabet’s deep war chest and global reach help it convert AI research into revenue at a pace that has started to impress Wall Street. One portfolio manager, Dan Morgan, pointed to the way Alphabet has filled its cash reserves with major commercial deals and argued that this financial strength is a key reason “the street” is increasingly favoring the company over its smaller rival, a shift reflected in recent coverage of Alphabet’s AI growth.
Alphabet is also taking on OpenAI more directly in the enterprise market, using its cloud‑computing unit to distribute Gemini models to corporate customers that already rely on Google Workspace and Google Cloud. Reporting on how Alphabet is “taking on OpenAI” through this channel underscores that the company is no longer content to be a fast follower, but is instead positioning its own models as the default choice for businesses that want integrated AI across productivity tools, data platforms, and infrastructure, a strategy highlighted in recent analysis of Alphabet’s cloud‑driven push.
Gemini’s breakout and Google Cloud’s momentum
Inside the company, executives describe Gemini as the fastest‑adopted AI model Google has ever released, a sign that the product is resonating with both developers and large customers. Chief executive Sundar Pichai has framed Gemini’s early traction as a turning point for Google Cloud, which is seeing a surge of demand from clients that want to embed generative AI into everything from customer support chatbots to internal analytics. In recent commentary, he hailed “the fastest adoption of any model in our history” and tied that directly to accelerating Google Cloud growth.
Outside observers are seeing the same pattern. A detailed breakdown of the AI market noted that Meta is pouring money into its own models yet “still trails” in the model race, and that OpenAI’s early lead is now being challenged by Google’s rapid Gemini rollout, a dynamic that has become more visible since Mar as Meta’s spending plans were compared with those of Meta and Google. Venture investors have echoed that view in their own commentary, with one widely shared post from OCR THE COR CORNER describing how Gemini is “driving massive growth” for Google and citing REUTERS coverage of how the company has surged ahead in the AI race, a perspective captured in the VC COR CORNER discussion.
Spending like a superpower to win the infrastructure war
The most striking signal of Alphabet’s intent is its willingness to spend at a level that would have seemed unthinkable even a year ago. In 2026, Google estimated capital spending to be in the range of $175 billion to $185 billion, up roughly 97% year over year, as it races to build out data centers, custom chips, and networking capacity for AI workloads. That figure instantly put Google at the center of one of the largest infrastructure build‑outs in tech history, and it came alongside guidance that cloud sales were growing at a double‑digit clip as customers adopted new AI services.
Investors did not greet that spending plan with unqualified enthusiasm. Google Shares Sink 5% Despite Earnings Beat on AI Capex Shock became a shorthand on trading desks for the tension between near‑term free cash flow and long‑term AI dominance, after Alphabet’s stock tumbled when the company detailed a Capex Shock of $185 billion. Another report noted that But its shares fell 3% on Wednesday after the company said it would spend up to $185 billion this year, underscoring how sensitive markets remain to Alphabet’s capital allocation even as they reward its AI momentum.
OpenAI’s funding squeeze and Alphabet’s advantage
Alphabet’s ability to write enormous checks stands in stark contrast to the financial constraints facing OpenAI. Dan Morgan, the senior portfolio manager who has been tracking the sector, has warned that the deals that OpenAI has with Microsoft and Oracle are highly tied to their ability to raise future funds, a structure that leaves the startup more dependent on external capital than a cash‑rich rival like Alphabet, as detailed in recent analysis of those Microsoft and Oracle partnerships. That dependence becomes more acute as model training costs rise and as customers demand ever larger, more capable systems.
At the same time, OpenAI is grappling with heavy operating losses. A widely discussed Jan video analysis argued that in the first half of this year OpenAI lost as much money as they were predicted to lose for the entirety of next year, describing how the company is “bleeding billions of dollars” and “starting to collapse” under the weight of its compute and research bills, a characterization that has fueled debate about the sustainability of its current business model and was laid out in detail in the Jan commentary. I see that contrast as central to why Alphabet can afford to treat AI as a long‑term infrastructure play, while OpenAI must constantly balance ambition with the need to secure fresh capital.
Search, stock performance, and the risks that remain
Alphabet’s AI surge is not happening in a vacuum, it is layered on top of a search business that remains a cash machine even as it undergoes radical change. In the third quarter of 2025, Google search sales increased to $56.6 billion from $49.4 billion a year earlier, helping the company grow earnings while it poured money into AI projects around the world in 2026, according to an analysis that called Google a must‑own AI stock and emphasized how core search still underwrites its risk‑taking. Another assessment went further, asking whether Alphabet is the greatest business ever built and noting that Management has outlined an aggressive spending plan aimed at expanding Alphabet’s AI infrastructure and capabilities, while also using its cash flow to support its own infrastructure buildout, a view captured in a detailed Alphabet profile.
Yet the pivot to AI is also exposing new vulnerabilities. Google has begun weaving generative answers into search results through AI Overviews, but However, the ongoing volatility of AI Overviews highlights that Google ( Google Search ) has yet to resolve those challenges, with publishers and marketers complaining about unpredictable visibility and shifting traffic patterns. Venture commentators like OCR THE COR CORNER have celebrated Google’s AI surge, pointing to REUTERS coverage of how the company has gone from laggard to leader, but their own posts also acknowledge that learning from failure will be essential as Google refines Gemini and its search experiments, a nuance reflected in the OCR commentary. For now, Alphabet’s combination of financial firepower, model adoption, and search cash flow has clearly shifted the balance of power with OpenAI, even if the path to a stable, AI‑first search experience is still very much a work in progress.
