Alphabet is aggressively challenging OpenAI, reflecting a major shift in Wall Street’s view that now positions Google’s parent as a leader in artificial intelligence. This marks a sharp reversal from a year ago, when investors believed Alphabet was falling behind competitors and penalized its stock. Company executives sounded notably more confident during Wednesday’s post-earnings call, the first since the launch of the Gemini 3 model. The new model has impressed users and helped Google close the gap in the AI race. Alphabet’s optimism around AI-driven revenue is supported by strong growth across both consumer-facing and enterprise segments.

CEO Sundar Pichai said the Gemini app surpassed 750 million monthly active users by the end of the December quarter, up from 650 million previously. While that figure remains below ChatGPT’s reported 800 million weekly users, Pichai noted that user engagement has risen sharply since Gemini 3’s release.

Gemini 3 is now embedded in Google Search’s AI Mode and also powers the company’s enterprise AI offerings, which have reached 8 million paid licenses. Although investors initially reacted negatively to Alphabet’s rising capital expenditure outlook, strong results from Google Cloud—where revenue jumped 48 percent year over year—quickly restored confidence. The stock recovered from early after-hours losses, reinforcing Wall Street’s stance that heavy AI spending is acceptable when matched by clear financial returns.

Over the past year, Alphabet has emerged as a leader among major technology firms, joining Nvidia and Apple as one of the few companies valued above 4 trillion dollars. In contrast, Microsoft’s stock has struggled amid concerns over its dependence on OpenAI, even as it signaled a slowdown in spending. Investor unease has also grown around OpenAI’s large financial commitments and ongoing losses, weighing on companies closely tied to it.

Market analysts say Alphabet is benefiting from this shift in sentiment. While OpenAI partnerships were once widely praised, investors are now wary of excessive exposure to its funding needs. Shares of companies heavily linked to OpenAI have declined sharply, while Alphabet’s stock has surged. With a strong balance sheet and recent infrastructure deals with major tech players, Alphabet is increasingly seen as the safer and more attractive AI bet. As one portfolio manager put it, Google currently has the momentum, and the market is clearly favoring it over OpenAI-linked alternatives.