It's almost impossible to choose just one artificial intelligence (AI) stock in your portfolio. There are a few companies dedicated entirely to AI, but many have their fingers in AI as well as other areas, so once you have a well-balanced portfolio, you'll end up owning multiple AI stocks.
But if I had to choose one, it would be it the alphabet (NASDAQ:GOG) (Nasdaq: Google).
Alphabet's AI ecosystem reaches almost every industry
Some may find it interesting that I didn't choose NvidiaThe undisputed king of artificial intelligence devices. Or maybe you expect me to choose Microsoft Because she has partnered with the company that many consider her a part of First place in the OpenAI generative artificial intelligence race.
However, I think Alphabet represents a nice compromise between these two spectrums.
First, Alphabet kept the development of its generative AI model in-house. This is crucial, as problems will eventually arise with any model. (For Alphabet's Gemini, several issues have already surfaced and been patched.) For tech giants like Microsoft or apple Not developing their own generative AI model seems a bit lazy and may cause them problems in the future. I think Alphabet's strategy gives it an edge over many of its competitors.
On the hardware front, Alphabet is a major buyer of Nvidia's GPUs, but has also developed its own chips specifically designed for training and running AI models. While Nvidia GPUs are great for AI training or general-purpose workloads, customers can get better performance if they use hardware that was developed with training AI models in mind. This is where Alphabet's Google Cloud Tensor Processing Units (TPUs) come into play. Because TPUs are specifically created to run AI workloads, they are more efficient and faster than Nvidia GPUs for training AI models.
However, workloads must be set up in a certain way to take advantage of the use of TPUs, so Nvidia GPUs will continue to be popular (which is why Google Cloud has so many of them). But as companies become more familiar with creating AI models, Google Cloud's TPUs may see a surge in popularity. With this device only available to Google Cloud customers, it gives Alphabet another layer of exposure to AI.
Alphabet is also an avid user of artificial intelligence. AI has long been used to understand website content to increase the likelihood that Google search results will provide users with what they are looking for. Additionally, it used artificial intelligence to identify patterns to better target its ads to viewers.
Finally, Alphabet has many tools for AI model developers. This is crucial, as any developer using Alphabet's tools will likely be locked into Alphabet's ecosystem, which will allow Alphabet to extract maximum value from it.
These are just some of the reasons why I think Alphabet is one of the best AI stocks to own. But the price at which you can buy it now is also compelling.
Alphabet stock doesn't carry a high price tag
Unlike many of the other companies I mentioned, Alphabet is not trading at an exorbitant premium. Since many technology companies are seeing dramatic changes to their bottom lines thanks to AI-related demand, let's use the price-to-earnings (P/E) ratio to assess their relative valuations.
using Standard & Poor's 500 As a broad market index to compare these valuations, we can get an idea of how expensive they are compared to the broader market. With the S&P 500 trading at 21.7 times forward earnings, Alphabet barely commands a premium compared to the other three companies.
While Nvidia is in a league of its own when it comes to growth, Alphabet's growth rates are similar to Microsoft's and much faster than Apple's, making it a more attractive stock to own.
Alphabet is a great AI stock, no matter how it's valued. While a suitable portfolio is filled with many stocks, Alphabet would be at the top of my shopping list if I had to pick just one.
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Susan Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Drury He has positions in the alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
If I could buy just one artificial intelligence (AI) stock, this would be it Originally published by The Motley Fool