The stock market has been on fire since the bear market ended in October 2022, with the “Magnificent Seven” leading the charge. Although Nvidia is Wall Street’s largest publicly traded company, it’s Google parent Alphabet (GOOGL 1.23%)(GOOG 1.16%) that’s outperformed of late.
While Alphabet is best known for its globally dominant internet search engine, Google, as well as its burgeoning cloud infrastructure services platform, Google Cloud, there’s another mammoth investment that’s been powering its stock higher over the last decade. However, Alphabet recently abandoned this decade-long, $346 billion investment to pursue its artificial intelligence (AI) ambitions. Based on what history tells us, Alphabet going all-in on AI is a mixed bag.
Image source: Getty Images.
Alphabet bids adieu to a steady $346 billion investment
Although Alphabet has established itself as one of Wall Street’s premier money managers, one of the most impressive investments it’s made is in itself. Between Jan. 1, 2016, and Dec. 31, 2025, Alphabet spent approximately $346 billion to repurchase shares of its stock:
- 2016: $3.693 billion in full-year buybacks
- 2017: $4.846 billion
- 2018: $9.075 billion
- 2019: $18.396 billion
- 2020: $31.149 billion
- 2021: $50.274 billion
- 2022: $59.296 billion
- 2023: $61.504 billion
- 2024: $62.222 billion
- 2025: $45.709 billion
The sizable uptick in buybacks that began in 2018 is a direct result of President Donald Trump’s Tax Cuts and Jobs Act, which permanently lowered the peak marginal corporate income tax rate from 35% to 21%. Enabling businesses to retain more of their income allowed them to repurchase their shares.
Today’s Change
(-1.23%) $-4.38
Current Price
$352.80
Key Data Points
Market Cap
Day’s Range
$351.76 – $358.13
52wk Range
$180.48 – $408.61
Volume
548K
Avg Vol
31.4M
Gross Margin
60.43%
Dividend Yield
0.24%
For companies with steady or growing net income, share buybacks can also increase earnings per share and make a company’s stock more fundamentally attractive to value-focused investors.
But on June 1, Alphabet officially squashed its $346 billion investment by announcing an $80 billion equity offering (which was subsequently raised to $84.75 billion). This offering, $10 billion of which went to Berkshire Hathaway in a private placement, is to be used to expand Alphabet’s AI infrastructure.
Image source: Getty Images.
Alphabet is going all-in on AI, and history suggests it’ll be a bumpy ride
Although Alphabet retains its strong cyclical advertising ties via Google and streaming platform YouTube, its jaw-dropping capital expenditures on AI, which are offsetting years of buybacks, are likely to be a mixed bag.
When peering five or more years into the future, this has all the hallmarks of a slam-dunk investment. Since Alphabet began integrating generative AI and large language model solutions into Google Cloud, sales in this high-margin segment have reaccelerated in a big way. In the March-ended quarter, Google Cloud revenue soared 63% from the year-ago period, with annual run rate sales topping $80 billion.
Over time, Google Cloud can overtake ads as Alphabet’s primary cash-flow driver.
“Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion.”
Analysts Projection: +52% YoY
Google Results:
– Cloud Revenue: +63% YoY
– Cloud Backlog: +300% YoY$GOOGL $GOOG pic.twitter.com/zNkiP1vcd1— Qualtrim (@qualtrim) April 29, 2026
On the other hand, every game-changing technology since (and including) the dawn of the internet has endured a bubble-bursting event early in its expansion. Regardless of how impressive early adoption of a new technology is, optimization takes time. It’ll likely be years before businesses are optimizing AI solutions to boost sales and profits.
If an AI bubble forms and bursts, which history clearly points to, Alphabet wouldn’t be immune. Thankfully, its competitive moat and cash-rich balance sheet would allow it to weather the storm better than most AI-focused companies.
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