Alphabet (GOOG) (GOOGL) has spent big money making its Gemini competitive in the realm of artificial intelligence, and the latest release reveals where some of that investment might take it next. Google has released Gemini 3.8 Live and Gemini 3.8 Live Extended Thinking, two models built specifically for creating capable and responsive voice-based AI agents for performing difficult tasks.
What Is Interesting About the News for Investors?
This is not just another chatbot update, and Google's work on the new technology will have a direct impact on its bottom line. Gemini 3.8 Live can execute tools and API calls while conducting the dialogue, process visual information nearly in real-time, and switch between 97 languages. Extended Thinking allows the agent to perform multi-step tasks using advanced reasoning. Google is already collaborating with Salesforce (CRM), Genspark, and Lumeris on the application of the technology, which may lead to further expansion of Gemini into the enterprise workflow.
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About Alphabet Stock
Alphabet, based in Mountain View, California, is the parent company of Google that runs businesses ranging from internet search and digital advertising to YouTube, cloud computing, productivity software, artificial intelligence, and other emergent technologies. Alphabet's market capitalization is estimated to be around $4.25 trillion, making it one of the largest technology companies globally.
Recently, Alphabet shares were trading around $356.76. GOOGL stock is down approximately 13% from its 52-week high of $408.61 but still over 50% above the 52-week low of $235.84. At the same time, Alphabet has substantially outperformed the market during the past year. Barchart data through Sept. 21 indicates that GOOGL gained roughly 40% over the past 12 months, while the S&P 500 Index ($SPX) was up approximately 16%.
www.barchart.com The valuation side of things is a bit more complicated. GOOGL stock has a forward P/E ratio of approximately 17x and a P/S ratio of 11x. The sales multiple is clearly expensive, but the earnings valuation seems reasonable given Alphabet's current growth rate. Therefore, in my opinion, Alphabet's stock looks more fairly priced than expensive now, especially if AI investments translate into accelerated growth in the Google Cloud segment.
Moreover, Alphabet distributes a quarterly dividend, but income is definitely not the reason to buy GOOGL. The annualized dividend yield of $0.88 per share is roughly 0.25%, so the focus of any investor looking at GOOGL stock should be mainly on earnings and growth.
Alphabet Beats on Q2 Earnings
In Q2, Alphabet produced an unusually strong earnings report. Revenue grew 24% year-over-year (YoY) to $119.8 billion, beating Wall Street expectations of approximately $117 billion. The diluted EPS increased from $2.31 to $9.11. Still, investors should be cautious with this EPS figure, as Alphabet recognized a net gain on equity securities of $99 billion, which added $6.26 to the diluted EPS for the quarter.
Operating performance was also quite impressive in its own right. Google Services revenue grew 15% to $94.5 billion, while Google Cloud revenue rocketed 82% to $24.8 billion. Cloud operating income stood at $8.8 billion, compared to $2.8 billion one year ago. Gemini is being adopted rapidly too, as the Gemini app has hit 950 million monthly active users and Gemini models process 22 billion API tokens per minute.
Alphabet does not give traditional quarterly revenue and EPS guidance, but the management increased its 2026 capital expenditures outlook to $195 billion to $205 billion from $180 billion to $190 billion. The reason for this increase is fast capacity deployment in order to cope with the demand for AI. Moreover, the management expects strong growth in the Google Cloud segment, although the greater use of third-party capacity may put pressure on margins in the short term.
This makes the new voice models even more important for Alphabet's financial performance. Gemini 3.8 Live Extended Thinking received an 82.6 rating in the Speech-to-Speech Quality Index from Artificial Analysis, while Google positions this technology for customer service, productivity, and enterprise agents. Gemini 3.8 Live is currently available via the Gemini API and Google AI Studio, allowing developers direct access to the technology.
What Do Analysts Expect From GOOGL Stock?
Wall Street is quite optimistic about Alphabet, assigning GOOGL stock a "Strong Buy" rating consensus and a price target of $432.39, implying an upside of approximately 21% from the current $356.76 price level. The street-high target price stands at $515, while the lowest target of $350 is more or less consistent with the current stock price.
www.barchart.com On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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