Alphabet (Google) and Microsoft are both $3‑trillion‑plus AI superpowers. But after Alphabet briefly overtook Microsoft in market value in November 2025, many investors are asking a simple question: between GOOGL and MSFT, which stock looks more attractive heading into 2026?
Google vs Microsoft stock: why this matchup just got interesting
In late November 2025, Alphabet’s market capitalization surged to around $3.6–3.7 trillion, briefly pushing it ahead of Microsoft to become the world’s third‑most valuable public company. [1] Coverage from Barron’s and others highlighted Alphabet’s 2025 rally of roughly 60%+ year to date, driven by booming ad and cloud demand and renewed confidence in its AI roadmap. [2]
Microsoft, meanwhile, remains a cloud and enterprise software juggernaut, with fiscal 2025 revenue of $281.7 billion (up 15%) and operating income of $128.5 billion (up 17%), as Azure revenue crossed $75 billion for the first time. [3]
Both companies now sit comfortably in the $3–4 trillion “AI mega‑cap” club alongside Apple and Nvidia. [4] But below the similar headlines, their businesses, growth profiles, and valuations look meaningfully different.
In this article, we’ll walk through:
- The latest news on GOOGL and MSFT
- How their earnings, AI strategies, and cloud businesses compare
- What analysts’ forecasts and valuations say today
- Key risks and which stock may fit different types of investors
Note: This is not personal investment advice. It’s a news‑style overview and should be combined with your own research or professional guidance.
Latest news on GOOGL and MSFT
Alphabet: record revenue, aggressive AI capex, and rising expectations
Alphabet’s third‑quarter 2025 results were a milestone:
- Revenue hit $102.3 billion, up 16% year over year, marking the first time Alphabet crossed the $100 billion quarterly revenue mark. [5]
- The growth was broad‑based: Google Search, YouTube ads, subscriptions, devices, and Google Cloud all delivered double‑digit growth. [6]
AI sits at the heart of that performance. Google Cloud revenue is accelerating, and Alphabet’s own commentary has emphasized that AI workloads and Gemini‑related API usage are now major contributors to cloud demand. [7]
That AI demand is driving a massive capex cycle:
- In mid‑2025 Alphabet raised its 2025 capital spending forecast by $10 billion to around $85 billion, explicitly to fund AI infrastructure and cloud capacity. [8]
- After its Q3 beat, the company pushed that range even higher, guiding capex to $91–93 billion as cloud revenue grew 34% and cloud backlog jumped $49 billion in just three months. [9]
Externally, Alphabet says its Gemini AI ecosystem now reaches hundreds of millions of users, with one analysis pegging it at roughly 650 million users, and notes that Gemini‑driven APIs are becoming a meaningful line of business for Google Cloud. [10]
Wall Street has responded with a wave of price‑target upgrades. Recent commentary includes:
- RBC reiterating a Buy at $315
- Arete Research raising its target to $380
- HSBC lifting its target to $370
- Guggenheim boosting its forecast to $375, all with bullish AI‑driven growth narratives. [11]
A Pivotal Research analyst recently described Alphabet as “winning everywhere,” raising a Street‑high target of $400, and arguing that Google’s leadership in search, YouTube, and custom AI silicon (TPUs) could justify a potential move toward a $5 trillion valuation over time. [12]
At the same time, some research houses are starting to cool the rating to ‘Hold’, arguing that the stock’s huge 2025 run may already discount a lot of AI optimism and that capex is approaching a cyclical peak. [13]
Microsoft: strong cloud numbers, Copilot momentum – and AI monetization questions
Microsoft’s FY 2025 numbers were equally impressive on paper:
- Revenue: $281.7 billion, +15% year over year
- Operating income: $128.5 billion, +17%
- Azure revenue: surpassed $75 billion, up 34% year over year. [14]
In Q4 FY 2025, Microsoft Cloud revenue reached $46.7 billion, up 27%, with Azure and other cloud services growing 39%. [15] Earlier in the year, management highlighted that 16 percentage points of Azure’s 33% growth in one quarter were driven directly by AI services. [16]
On the product side, Microsoft 365 Copilot has become central to the story. At Microsoft Ignite 2025, the company said:
- Over 90% of the Fortune 500 now use Microsoft 365 Copilot.
- Microsoft shipped more than 400 new Copilot features in the last year. [17]
However, recent headlines show the AI ramp isn’t friction‑free. A report suggested Microsoft had reduced AI software sales quotas in response to slower‑than‑expected demand for premium AI tools such as Copilot and Azure AI services. [18] Microsoft publicly denied lowering growth targets for AI software sales, but acknowledged that large enterprise buyers want clearer, quantifiable productivity gains before paying steep price uplifts. [19]
In short: Microsoft’s cloud and AI businesses are growing fast, but investors are now scrutinizing ROI on AI capex and the pace of software monetization, just as they are with Alphabet.
Fundamentals today: size, growth and profitability
While GOOGL and MSFT share the same AI hype cycle, their financial profiles differ in some important ways.
Scale and growth
- Alphabet’s latest reported quarter delivered $102.3 billion in revenue, growing 16% year over year, with broad‑based strength in ads, subscriptions, devices, and cloud. [20]
- Microsoft’s fiscal 2025 year saw $281.7 billion in revenue, up 15%, with Intelligent Cloud revenue in one quarter growing 26% and Azure up 39%. [21]
Profitability
A recent comparison of both companies’ latest quarterly numbers showed:
- Alphabet: operating margin around 30.5% on roughly $102.35 billion of quarterly revenue.
- Microsoft: net margin around 35.7% on about $77.67 billion of quarterly revenue. [22]
That’s broadly consistent with the long‑running pattern: Microsoft tends to run slightly higher margins, especially at the net income level, while Alphabet is catching up as its cloud business scales and losses from “Other Bets” stay contained.
Valuation snapshot
As of early December 2025:
- Alphabet Class A (GOOGL) trades around $320 per share, with a trailing price‑to‑earnings (P/E) ratio near 24. [23]
- Microsoft (MSFT) trades close to $482 per share, with a trailing P/E near 37. [24]
So even after Alphabet’s huge 2025 rally, GOOGL still trades at a noticeable discount to MSFT on earnings‑based metrics. Some valuation platforms, using discounted cash‑flow models, even estimate Microsoft at roughly 15% above “intrinsic” value and Alphabet at 40–45% above, underscoring that both are richly valued but Alphabet has arguably run further ahead of conservative DCF assumptions. [25]
AI strategy: Gemini vs Copilot and Azure
Alphabet: Gemini everywhere + TPU advantage
Alphabet’s AI strategy now revolves around Gemini, its family of large language models integrated across:
- Google Search (for AI‑enhanced results and overviews)
- YouTube (for content discovery and creation tools)
- Workspace (Docs, Gmail, Meet, etc.)
- Android and Chrome
- Google Cloud APIs and Vertex AI
Management and third‑party analyses credit Gemini usage and AI APIs as major contributors to Q3’s record revenue, especially inside Google Cloud. [26]
Alphabet also has a hardware edge: it designs its own Tensor Processing Units (TPUs) to run AI workloads, both internally and for cloud customers. Analysts argue this can lower compute costs, improve margins, and create a differentiated alternative to Nvidia GPUs. [27]
Some key AI‑related themes around Alphabet in 2025:
- Capex is exploding, but management insists AI ROI is keeping pace, as cloud revenue growth accelerates and backlog surges. [28]
- Gemini user adoption — approaching the high hundreds of millions — gives Alphabet a large base for monetizing AI in consumer products (search and YouTube) and enterprise tools (Workspace and Cloud). [29]
- Alphabet is positioning itself not just as an AI application player but also as part of the AI infrastructure stack, renting TPUs and AI services to other companies. [30]
Microsoft: Copilot, agents and the enterprise AI stack
Microsoft’s AI story centers on Copilot and the notion of an “AI‑first productivity stack”:
- Microsoft 365 Copilot is integrated into Word, Excel, PowerPoint, Outlook, Teams and more, aimed at turning everyday workflows into AI‑assisted tasks.
- At Ignite 2025, Microsoft also showcased AI agents powered by “Work IQ”, a layer that learns from a company’s internal data and work patterns to automate multistep workflows. [31]
This strategy leans into Microsoft’s biggest advantage: its deep footprint in enterprise IT. More than 90% of the Fortune 500 already rely on Microsoft 365, making Copilot’s distribution and upsell opportunity enormous. [32]
On the infrastructure side, Azure AI services – including model hosting, fine‑tuning and inference – are driving a significant slice of Azure’s mid‑30% growth rate. [33]
The challenge? Proving value to customers. Enterprises are testing Copilot and Azure AI, but many are cautious about paying hefty price premiums without seeing clear productivity metrics, which is why reports of adjusted AI sales quotas and slower‑than‑hoped adoption hit sentiment in early December. [34]
Put simply:
- Alphabet’s AI strategy is consumer‑plus‑cloud, fueled by Gemini and TPUs.
- Microsoft’s AI strategy is enterprise‑plus‑cloud, fueled by Copilot, agents, and Azure AI.
Valuation, forecasts and Wall Street sentiment
Analyst targets: who has more upside?
Alphabet (GOOGL)
- Recent surveys of Wall Street analysts show an average 12‑month price target in the low‑to‑mid $300s, only slightly above the current ~$320 share price – suggesting limited upside on consensus numbers. [35]
- However, a cluster of firms – including RBC, Arete, HSBC and Guggenheim – have raised targets into the $315–$380 range, all with Buy ratings and explicitly citing accelerating AI and cloud demand. [36]
- Pivotal Research now sits at the high end with a $400 target (roughly 25% upside from recent levels), arguing Alphabet could emerge as the next $5 trillion company if AI plays out favorably. [37]
Most aggregators still show Alphabet as a broad “Buy” or “Strong Buy”, with well over three‑quarters of analysts rating it positively. [38]
Microsoft (MSFT)
Analyst sentiment on Microsoft is even more uniformly positive:
- MarketBeat recently reported a “Moderate Buy” consensus from 43 analysts (with most in the Buy or Strong Buycamp) and an average one‑year price target around $634, implying roughly 30–32% upside from the high‑$480s. [39]
- TipRanks data is similar, with a Strong Buy consensus and an average target near $630.64, again suggesting around 30% upside over the next 12 months. [40]
- Other forecasts and commentary also characterize Microsoft as a core AI leader with durable double‑digit earnings growth expectations into the late 2020s. [41]
In other words, consensus upside is currently higher for MSFT than for GOOGL, mostly because Alphabet’s share price has already sprinted ahead of many earlier targets.
2025 stock performance: “Alphabet on fire, Microsoft still solid”
Several news outlets have described Alphabet’s 2025 run as “stunning,” noting that the stock is up roughly 60–70% year to date, depending on the exact start date, with a particularly explosive 17% jump in November alone as Gemini 3 and new AI features impressed investors. [42]
Microsoft’s share performance has been strong but less dramatic – one mid‑2025 analyst roundup noted the stock was up about 20% for the year at that point, and more recent AI headlines caused a brief pullback before the shares recovered. [43]
Alphabet has therefore been the short‑term momentum winner, while Microsoft has delivered steadier, less volatile gains.
Key risks for Google and Microsoft stock
Risks for Alphabet (GOOGL)
- Execution risk on massive AI capex
With annual capital spending now guidance in the $90+ billion range, Alphabet must prove that AI‑driven cloud and ad revenue grows fast enough to support those investments and protect margins. [44] - Regulatory and antitrust pressure
Alphabet still faces investigations and lawsuits in the U.S. and abroad over its dominance in search and digital advertising. A negative ruling could impact default search deals or ad tech practices, which remain core profit centers. - AI competition and potential commoditization
Gemini competes not just with OpenAI and Microsoft, but also with Meta, Anthropic, and open‑source models. If AI tools become commoditized and price competition intensifies, monetization could fall short of current optimistic forecasts. - Valuation expectations already high
After such a strong run, some analysts now rate the stock a Hold, arguing that Alphabet may be near a valuation peak unless growth accelerates further. [45]
Risks for Microsoft (MSFT)
- AI monetization vs. AI spending
Microsoft is pouring tens of billions into AI infrastructure, partly via its data‑center investments and partnership with OpenAI, yet recent reports suggest that enterprise customers are cautious about paying premium pricesfor AI software until they see tangible productivity gains. [46] - Cloud growth deceleration risk
Azure remains the key driver of Microsoft’s valuation. While current growth rates are still robust (mid‑30s and even 40% in some quarters), any slowdown could pressure the multiple if investors conclude the AI boost is fading. [47] - Regulatory scrutiny in cloud and AI
Microsoft is under global antitrust scrutiny for its dominance in productivity software, cloud, and AI partnerships. Changes in licensing, bundling, or data‑sharing requirements could impact margins or growth. - Higher valuation starting point
With a trailing P/E around the mid‑30s, MSFT is priced as a premium quality compounder. If earnings growth slows or AI fails to deliver step‑change margins, the stock could be vulnerable to a multiple contraction. [48]
GOOGL vs MSFT: which stock looks stronger for 2026?
No one can say with certainty which stock will outperform next year, but the current setup suggests different types of investors may favor different names.
When Alphabet (GOOGL) may make more sense
Alphabet might appeal more if you:
- Prioritize faster top‑line growth with broad exposure to consumer internet, advertising, and cloud.
- Believe Gemini and TPUs can give Google a durable AI advantage in both consumer products and infrastructure. [49]
- Think the company can maintain mid‑teens revenue growth while expanding margins, turning today’s capex surge into strong free‑cash‑flow growth later in the decade. [50]
- View Alphabet’s lower trailing P/E vs Microsoft as a sign of slightly better value in an AI‑heavy mega‑cap bucket. [51]
In that framing, Alphabet is the higher‑beta AI winner: faster‑growing, more advertising‑exposed, and more sensitive to AI sentiment and regulatory outcomes.
When Microsoft (MSFT) may make more sense
Microsoft might be more attractive if you:
- Want exposure to AI with a more defensive tilt, anchored in enterprise software, Office, Windows, and a recurring‑revenue cloud model. [52]
- Believe Copilot and AI agents will become standard in knowledge‑worker workflows, creating a long‑tail monetization opportunity layered on top of Microsoft 365, Dynamics, and GitHub. [53]
- Value best‑in‑class margins and shareholder returns, including dividends and buybacks (Microsoft returned roughly $9–10 billion per quarter to shareholders in FY 2025). [54]
- Are comfortable paying a higher multiple for what many analysts still see as one of the highest‑quality, lowest‑risk earnings streams in large‑cap tech. [55]
Here, Microsoft is the steady compounder: a core AI and cloud platform with more defensive characteristics and broad institutional ownership.
Why many investors simply own both
A growing number of institutional and retail investors treat GOOGL and MSFT as “AI core holdings” – owning both as a diversified way to bet on the long‑term growth of:
- AI infrastructure (cloud, chips, data centers)
- AI productivity software (Copilot, Gemini in Workspace)
- Consumer AI applications (search, YouTube, Android, Windows, Xbox, etc.)
Analysts at The Motley Fool and other research firms have explicitly framed the debate as “which $3 trillion AI stock is the better buy now?”, but often conclude that both are likely to remain central to AI and cloud over the next decade, even if leadership bounces back and forth. [56]
For long‑term investors willing to hold through volatility, holding both GOOGL and MSFT can reduce single‑company risk while maintaining strong exposure to AI, cloud, and software.
How to research Google and Microsoft stock before you buy
If you’re considering either stock, here are practical next steps:
- Read the latest earnings materials
- Compare analyst views, not just single price targets
Look at the distribution of targets (bull, base, bear) and ratings (Strong Buy, Buy, Hold). Sites like MarketBeat, TipRanks, and Zacks collate these for both GOOGL and MSFT. [59] - Stress‑test your own thesis
Ask:- What would make AI monetization disappoint?
- How would a recession hit ads (Alphabet) vs enterprise IT budgets (Microsoft)?
- How much regulatory risk are you comfortable with?
- Consider portfolio fit and time horizon
Both stocks are volatile and heavily influenced by AI sentiment and interest‑rate expectations. They generally suit a multi‑year horizon more than a short‑term trading mindset.
Bottom line
- Alphabet stock is riding a powerful wave of AI‑driven growth in ads and cloud, buoyed by enthusiastic analysts and record revenue – but it comes with escalating capex, regulatory questions, and a lot of future success already priced in. [60]
- Microsoft stock offers an arguably safer way to play enterprise AI and cloud via Copilot and Azure, backed by exceptional profitability and a strong Wall Street consensus – albeit at a higher earnings multiple and with emerging questions about AI software ROI. [61]
For investors focused on growth and AI upside, GOOGL may look more compelling. For those prioritizing stability, dividends, and enterprise exposure, MSFT may be more comfortable. Many long‑term investors will continue to own both as central pillars of an AI‑centric portfolio.
Whatever you choose, treat Google vs Microsoft stock not as a one‑day race, but as a decade‑long story about AI, cloud, and software eating the world—and decide where you want your capital to sit in that narrative.
This article is for informational purposes only and does not constitute financial, investment, or tax advice. Always do your own research and consider consulting a licensed financial adviser before making investment decisions.
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