Google-parent Alphabet has roared back of late, but questions are emerging over whether the tech giant can sustain its pace of growth. Alphabet shares are up nearly 33% this year and more than 22% over just the past month. They've also soared more than 72% from an April closing low. The company — which was slow to be considered an artificial intelligence play — has quickly garnered favor among investors following a favorable court ruling in early September that allowed the company to keep Chrome. Also bolstering the stock is the release of Google's Nano Banana image-editing feature, which drove a clear uptick in Gemini AI app usage in recent weeks , and an acceleration in Google Cloud growth. There has also been increasing attention on Google's tensor processing units, or TPUs, as the company expands availability of the in-house chip and gets closer to competing with chipmakers like Nvidia . Alphabet on Sept. 15 became the fourth company to reach a market cap of $3 trillion . However, the stock may have run too far too fast. LSEG data shows the consensus price target implies a decline of 5% ahead for Alphabet shares. GOOGL YTD mountain GOOGL year to date Although the market has rewarded Google for its improving Gemini adoption rates, Melius Research tech analyst Ben Reitzes raised questions over how Google is counting AI and Search volume, particularly given reports of lower rate of return on Google ad spend. "GOOGL is doing well in Cloud and Gemini is seeing more subscribers, but it still isn't out of the woods yet in Search as checks indicate that AI summaries don't provide the same rate of return for ads ... GOOGL has deserved its rally, but Microsoft still deserves a meaningful premium," Reitzes said in a note to clients Monday. Outperforming Microsoft by 'too much'? Reitzes also said Alphabet may be outperforming Microsoft by "too much." Indeed, Google has soared 41% this quarter, while Microsoft is up just 2% in that time. "This outperformance comes even after Microsoft posted a great June quarter with strong guidance for Azure," the analyst said. "Microsoft's stock may be clouded by a lack of clarity around its relationship with OpenAI (the big driver of Azure) especially after 2030, but it should be a big help for a while." Alphabet's 60-day outperformance relative to Microsoft last week also reached its highest level since January 2006, a CNBC data analysis showed. Moreover, Reitzes noted believes that Microsoft stands to uniquely benefit from a surge in AI inference given its deep partnership with ChatGPT developer OpenAI, which could allow the tech giant to see greater inference workloads on Azure while taking a cut of OpenAI's revenue. "Checks for Azure are showing no slowdown and Microsoft should make some compelling announcements around agents and Copilot at its Ignite conference in November" he said, maintaining his buy rating and $625 price target on Microsoft. That said, most analysts still have bullish ratings on Alphabet. Of the 64 who cover it, 52 rate the stock a buy or strong buy, per LSEG. Truist analyst Youssef Squali, for one, on Monday reiterated his buy rating on Alphabet under the belief that the company is still winning in search, despite doubts about AI interrupting users' search engine behaviors. "We remain constructive on GOOGL as we believe the company continues to dominate the Search mkt at 90%+ even as new Gen-AI platforms are growing users & usage," he wrote to clients Monday. "Our analysis suggests that Google dominates the all-important commercial queries while AI search accounts for only ~1% of total referral traffic and an immaterial % of conversions so far. A look at growth in online search volume & use cases suggests the advent of AI chatbots is expanding search's TAM not cannibalizing it." Dan Niles, Niles Investment Management founder and portfolio manager, told CNBC earlier this month he is sticking by Google for the long term and believes the company will ultimately have the best AI app, particularly because Alphabet has "the most free data in the world" through Youtube. At the time of Alphabet's second-quarter results in July, CEO Sundar Pichai said the company's AI systems were processing over 980 trillion "tokens" per month , a significant uptick compared to 480 trillion monthly tokens it was processing across its platforms in May. Alphabet's AI Overviews, which summarize search results, had about two billion monthly users across more than 200 countries, while its Gemini App had more than 450 million monthly active users, Pichai said. Tokens refer to a unit of text AI models process. Wolfe Research analyst Shweta Khajuria said in a note that Google remains one of her top picks until the end of the year. "Google continues to impress on AI product features. After using this product ourselves, we are not surprised it is topping the app store rank charts. Given Ad spend resiliency, Google's ongoing product upgrades, and Cloud share gains, Google remains one of our NT top picks," she wrote in a Sept. 16 note. Still, the stock is overbought with its relative strength index at 75. Stocks in overbought territory are susceptible to a pullback near term. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
