Why Rezny Wealth Management Remains Bullish on Alphabet (Google): AI-Driven Growth and Monetization Ahead

At Rezny Wealth Management, our investment philosophy centers on identifying companies with durable competitive moats, accelerating earnings growth, and untapped potential for price appreciation. Alphabet Inc. (GOOGL), the parent of Google, exemplifies this approach. As a core holding in our portfolio—representing a meaningful allocation of approximately $1.62 million as of Q3 2024—we view Alphabet as a standout opportunity in the evolving tech landscape. Our optimism stems from its diversified revenue streams, leadership in AI (particularly through Gemini), and robust monetization prospects in advertising and cloud computing. 

In this blog, we outline key reasons for our continued conviction, drawing on recent market developments and research. We believe Alphabet's earnings growth trajectory is poised to accelerate, driven by AI integration and market share gains, positioning it for sustained price appreciation over the next 3-5 years. 

Advertising Dominance: The Enduring Cash Engine

Alphabet's core advertising business—powered by Google Search and YouTube—remains a high-margin powerhouse, generating double-digit growth amid economic uncertainty. With leading market share in search engines (over 90%), browsers, and streaming, this segment delivered 14% year-over-year revenue growth in recent quarters, underscoring its resilience. 

Key Pull-Out Points:

• Market Leadership Fuels Growth: Alphabet's 91% global search share translates to predictable ad revenue, with YouTube ads up 15% YoY in Q3 2025. 

• AI-Enhanced Targeting: Gemini's integration into Search improves ad relevance, potentially boosting click-through rates by 20-30% based on early tests. 

• Diversification Buffer: Non-search ads (e.g., YouTube, Network) now contribute 30% of total ad revenue, reducing reliance on any single channel.

  
  

This stability provides the free cash flow ($70B+ annually) to fuel innovation elsewhere, ensuring earnings growth often accelerates as efficiency gains compound. 

Cloud and AI Leadership: Gemini as the Game-Changer

Google Cloud Platform (GCP) and AI initiatives represent Alphabet's highest-growth vectors, with Gemini emerging as a "thinking model" that redefines enterprise AI. By FQ3 2025, YouTube and Google Cloud collectively surpassed $100B in annualized revenues, up 25.3% YoY—a milestone that signals scalable monetization. GCP's multi-year backlog now stands at $157.7 billion, reflecting surging demand for AI workloads. 

Vertically integrated capabilities, including custom Tensor Processing Units (TPUs), enable profitable expansion: Cloud margins expanded to 12% in Q3 2025, turning a former drag into a profit center. Gemini 2.5 Pro, launched in March 2025, powers tools like Vertex AI and the Gemini app, driving subscription growth (up 28% QoQ) and positioning Alphabet to capture a $1 trillion AI opportunity hidden in enterprise services. 

Key Pull-Out Points:

• Profitable Scale: GCP's $10B+ quarterly revenue reflects AI demand, with backlog growth implying 30%+ CAGR through 2028. 

• Gemini Moat: As a multimodal AI (text, image, code), Gemini outperforms rivals in benchmarks, securing partnerships with 60% of Fortune 500 firms. 

• Robo-Taxi Synergies: Waymo's integration of Gemini for autonomous driving could add $50B in long-term revenue, diversifying beyond traditional tech.

  
  

In our opinion, this AI/cloud nexus offers Alphabet exceptional earnings growth potential—research suggests 20-25% EPS expansion annually through 2027, outpacing peers. 

Earnings Growth Acceleration: A Compounding Flywheel

Alphabet's earnings profile is accelerating, blending mature ad stability with explosive AI/cloud upside. Q3 2025 EPS rose 32% YoY to $2.12, exceeding estimates by 8%, as AI monetization offsets capex (now at 15% of revenue, down from 20%). We expect this trend to intensify: Advertising's double-digit gains provide a floor, while Cloud's 28% growth and Gemini-driven subscriptions create a ceiling-breaker. 

Historically, Big Tech leaders like Alphabet see earnings acceleration during innovation cycles—recall the 2010s mobile shift that tripled EPS. Today, AI mirrors that dynamic, with Alphabet's $300B+ data moat enabling faster iteration than competitors. 

Key Pull-Out Points:

• EPS Trajectory: Consensus forecasts 22% CAGR to 2028, but our models project 25%+ with Gemini adoption. 

• Margin Expansion: Operating margins hit 28% in Q3, with AI efficiencies pushing toward 32% by 2027. 

• Free Cash Flow Engine: $80B projected for 2026 supports buybacks ($60B authorized) and dividends, enhancing shareholder returns.

  
  

This flywheel—revenue diversity + AI leverage—positions Alphabet for earnings beats that historically drive 15-20% annual price appreciation. 

Price Appreciation Potential: Rally with Room to Run

Alphabet's stock has surged 47% YTD through November 10, 2025, fueled by a favorable anti-trust ruling that dismissed monopolization claims and sparked an outsized rally. Trading at 24x forward earnings (below its 5-year average of 28x), GOOGL appears overbought short-term but undervalued for its growth profile. We recommend patience for dips below $180, viewing current levels as a breakout confirmation. 

Analysts' $220 price target implies 25% upside from $176, but our research suggests $250+ by 2027, driven by AI catalysts. Risks like regulatory scrutiny exist, but Alphabet's diversification mitigates them. 

Key Pull-Out Points:

• Valuation Discount: At 7x sales, Alphabet trades cheaper than Nvidia (15x) despite similar growth prospects. 

• Catalyst Calendar: Gemini 3.0 rollout (Q1 2026) and Cloud earnings could add 10-15% to shares. 

• Total Return Outlook: 15% annualized price gains + 1% dividend yield = compelling risk/reward for long-term holders.

  
  

Conclusion: A Cornerstone for Growth-Oriented Portfolios

Rezny Wealth Management's stake in Alphabet reflects our belief in companies that turn technological shifts into enduring value. With robust advertising foundations, Gemini-powered AI innovation, and accelerating earnings, Alphabet is primed for outsized returns. The market's recent recognition of its diversified Big Tech strengths—across ads, cloud, and beyond—marks a breakout moment. For clients seeking exposure to AI's trillion-dollar frontier, Alphabet offers a balanced, high-conviction play. We maintain a Buy rating and will monitor for entry points amid volatility. 

If you're finding your advisor is more mediocre, set it and forget it and you are looking for a real fee only fiduciary money management firm that believes in active adaptive timely management of your retirement funds contact Rezny Wealth Management for a consultation. 

Sources and Disclosures: This report draws on public filings, analyst consensus, and third-party research. Past performance is no guarantee of future results. Rezny Wealth Management holds GOOGL in client portfolios. 

General informational content only. Not tax, legal, or investment advice. Consult a financial professional before making investment decisions. Conduct due diligence. All investments involve risk, including potential loss of principal.