Artificial intelligence (AI) could be the biggest breakthrough technology ever. However, some believe that quantum computing will be even bigger than AI. Autonomous taxi services, commonly known as ‘robotaxis’, could trigger a new tectonic shift in society.
Investing in one of these hot areas could lead to huge profits over the next decade. But you don’t necessarily have to buy multiple shares. Here’s a “Magnificent Seven” stock that has it all.
Check all the boxes
Google parent Alphabet (GOOG -1.14%) (GOOGL -0.98%) has been a pioneer in the field of AI for years. The researchers developed transformers (the “T” in ChatGPT) that paved the way for today’s large language models (LLMs).
The company remains one of the top AI leaders. Google Gemini is among the most powerful AI models available. Google Cloud offers customers a wide range of AI tools. Google Search, YouTube and Alphabet’s other products use AI extensively.
While classical computers use bits (0s or 1s), quantum computers use qubits (quantum bits) that can be 0, 1, or both at the same time. They can also become ‘tangled’ with other qubits that are far away. These features give quantum computers the potential to process more information much faster than classical computers. Google’s recent introduction of its new Willow chip could be a major breakthrough in the development of a useful, large-scale quantum computer.
Alphabet’s Waymo unit is leading the way in offering robotaxi services. Waymo already offers autonomous rides in Los Angeles, Phoenix and San Francisco. It plans to expand to Austin, Atlanta and Miami soon.
Sure, there have been a few highly publicized issues with Waymo’s service, including an incident where one of its robotaxis repeatedly drove around in circles in a parking lot. However, self-driving technology is generally reliable and continues to improve. Investors shouldn’t ignore Waymo’s potential to become a major growth driver for Alphabet in the coming years.
More beautiful than most
AI should serve as a major tailwind for all of the Magnificent Seven stocks. Some of them could also be winners in the field of quantum computing, especially including Amazon, MicrosoftAnd Nvidia. Amazon, Nvidia and Tesla focus on the robotaxi market in different ways.
But none of the other Magnificent Seven members are as much of a leader in all these technologies as Alphabet. The company is also more magnificent than most in other important ways.
If cash is king, Alphabet sits on the throne. The tech giant’s cash, cash equivalents and short-term investments of $93.2 billion are larger than the cash holdings of any other Magnificent Seven company. Alphabet is very well positioned to continue investing in research and development in the areas of AI, quantum computing and robotaxis.
The stock is also one of the cheapest of the Magnificent Seven based on its growth prospects. Only Nvidia has a lower price-to-earnings-growth (PEG) ratio than Alphabet’s PEG multiple of 1.27.
Two things to look at
Investors should keep an eye on two things that could have a negative impact on Alphabet. First, in August 2024, a federal judge ruled that Google violated antitrust laws by creating an illegal monopoly in the search engine market. Google is also embroiled in antitrust litigation regarding its digital advertising practices. Second, some believe that generative AI poses a huge (perhaps even existential) threat to Google Search.
However, Google is appealing the decision on its alleged search monopoly. Some legal experts believe the company’s case is strong and expect relatively limited remedies rather than major changes that will harm its business.
As for the generative AI threat, Google Search is already integrating genAI into its AI overviews. Google’s advertising revenue from the search network continues to grow. Sundar Pichai, CEO of Alphabet and Google, stated in the company’s third quarter earnings call that the new feature increases search usage and user satisfaction. He added: “The integration of ads within AI Overviews is also performing well, allowing people to connect with businesses as they search.”
Perhaps these problems could become bigger problems for Alphabet, but I’m optimistic that won’t be the case. I think Alphabet’s leadership in AI, quantum computing and robotaxis makes it one of the best Magnificent Seven stocks to buy right now.
Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions at Alphabet, Amazon and Microsoft. The Motley Fool holds positions in and recommends Alphabet, Amazon, Microsoft, Nvidia and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
