In the past decade, perhaps no stock market trend has been as obvious as the changing sector layout. A notable 33% of the S&P 500 index is accounted for by the information technology sector these days. According to research by The Motley Fool, some of the world’s most valuable businesses are in the technology sector.
This part of the market is a good place to start looking for opportunities. That said, if I could make one tech investment over the next five years, this dominant company would be it.
Image source: Getty Images.
It’s time to consider this top AI stock
Investors are surely familiar with Alphabet (GOOGL 2.54%) (GOOG 2.52%). The tech juggernaut sports a gargantuan market capitalization of $4.6 trillion, indicating its monster success. Shares have surged 131% just over the past 12 months (as of May 27).
Alphabet is getting the praise that it deserves. Its fundamental momentum is impressive.
During the latest quarter (Q1 2026 ended Mar. 31), the business generated $110 billion in revenue, up 22% year over year. This was the fastest growth rate in 12 quarters.
And profits are through the roof. Operating income totaled $39.7 billion in the first quarter, rising 30% compared to the same period of 2025. Alphabet’s operating margin expanded from 34% in Q1 last year to 36% in the most recent quarter.
This business is benefiting from the artificial intelligence (AI) boom. And it’s apparent when you look at Google Cloud’s stellar performance. Sales soared 63% year over year to $20 billion in the first quarter, with the operating margin coming in at a robust 33%.
Today’s Change
(-2.54%) $-9.91
Current Price
$380.22
Key Data Points
Market Cap
$4.6T
Day’s Range
$378.49 – $385.23
52wk Range
$162.00 – $408.61
Volume
1.3M
Avg Vol
28.3M
Gross Margin
60.43%
Dividend Yield
0.22%
Investors can’t complain about the current valuation
Alphabet continues to be a winning addition to investors’ portfolios. The company’s shares have climbed 31% just in the last eight weeks. And the future still looks bright.
The current valuation isn’t too demanding. This AI stock trades at a price-to-earnings ratio of 29.6. While this is 21% more expensive than the trailing-five-year average, Alphabet is the third-cheapest opportunity in the “Magnificent Seven” group based on this popular multiple.
But the business is arguably in the strongest position as we look to the next five years and beyond. Alphabet possesses a wide economic moat, thanks to powerful network effects in Google Search and YouTube, switching costs for Google Cloud customers, and an unrivaled intangible asset: its ability to collect and leverage data. Add all of this to its technological know-how, and it’s difficult to have any complaints about this company.
Alphabet should keep posting solid financial results that propel the stock in the future.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
