Alphabet is emerging as a frontrunner in the global artificial intelligence race, as analysts and executives say Google has overtaken OpenAI, marking a sharp reversal from a year ago when the company was widely seen as lagging.

That change in sentiment was underscored during Alphabet’s latest earnings call, its first since releasing the Gemini 3 model. Chief executive Sundar Pichai said AI investments are now translating into broad-based revenue growth across the company.

“Overall, we’re seeing our AI investments and infrastructure drive revenue and growth across the board,” Pichai said.

Still, investors reacted cautiously after Alphabet said it could spend up to $185 billion on capital expenditure this year, potentially more than doubling spending from 2025. Alphabet shares fell around 3% on Wednesday as concerns grew over the scale of future investment.

Gemini gains momentum

Pichai said the Google Gemini app has surpassed 750 million monthly active users, up from 650 million in the previous quarter. While that still trails ChatGPT, OpenAI’s flagship product, Google’s user growth and engagement are accelerating, particularly since the launch of Gemini 3.

Gemini is now integrated into Google’s search “AI Mode” and powers its enterprise AI offering, which has reached 8 million paying licences, according to the company.

Alphabet’s cloud business has been a major beneficiary. Revenue at Google Cloud surged 48% in the December quarter, exceeding Wall Street expectations and reinforcing investor confidence that AI spending is producing tangible returns.

From laggard to leader

Since early 2025, Alphabet’s shares are up more than 80%, even after this week’s pullback. Analysts say the company is now viewed as a peer to Nvidia and Apple among the most valuable firms globally.

By contrast, companies closely tied to OpenAI have come under pressure. Shares of Microsoft, which holds a major stake in OpenAI and Oracle, which has large contracts linked to OpenAI’s infrastructure, have fallen sharply in recent months.

Investors are increasingly worried about whether OpenAI can finance its expanding list of multi-billion-dollar commitments while continuing to operate at a loss.

“There’s a narrative emerging where the market is favouring Google versus OpenAI,” said Paul Meeks, head of tech research at Freedom Capital Markets. “Late last year, investors started questioning how much exposure companies really want to OpenAI’s spending needs.”

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Big bets, big questions

Alphabet’s aggressive investment plans reflect both the scale of the opportunity and the risk. Bernstein analyst Mark Shmulik warned that combined capital spending by major technology firms could approach $1 trillion in 2026.

“For that to pay off, the total addressable market for AI-driven products needs to expand very quickly,” he said.

For now, many investors appear willing to back Google’s strategy, betting that its deep cash reserves, vast user base and growing enterprise footprint give it a stronger foundation than rivals.

As one portfolio manager put it: “Right now, Google has the hot hand.”

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