As the AI race hurtles toward 2026, market analysts are sharply divided on the fortunes of tech giants, warning that Alphabet Inc.-owned (NASDAQ:GOOG) (NASDAQ:GOOGL) Google’s embrace of generative AI could severely undercut its core advertising business while favoring Microsoft Corp.'s (NASDAQ:MSFT) stable cloud growth.

Check out GOOG’s stock price here.

The Search Paradox

While speaking to Schwab Network, Cory Johnson, Chief Market Strategist at Epistrophy Capital Research, argues Google faces a unique existential threat: to stay relevant, it must disrupt its own highly profitable business model.

Google has historically generated immense revenue by providing search links that users click for information. However, generative AI provides direct answers, eliminating the need for those clicks.

“It cannibalizes their business,” Johnson explained. He noted that when Google presents AI results, they provide answers rather than links, which cuts straight into their primary revenue stream.

Johnson pointed to data suggesting users are significantly less likely to click away to other sites when provided with an AI-generated answer compared to traditional search results.

See Also: Google’s Gemini Eating ChatGPT’s Lunch: Market Share Gain From 5% To 18% Is ‘Clearest Signal’ That Alphabet Is Winning AI War

Microsoft's Relative Safety

Conversely, John Freeman, Co-Founder of Ravenswood Partners, favors Microsoft heading into 2025 and 2026.

Freeman argues Microsoft offers significant AI upside through its Azure cloud platform—which recently posted 35% growth—without facing the same internal disruption risks as Google.

Freeman stressed that core profit engines like Windows and Microsoft 365 are unlikely to be disrupted by AI in the near term, positioning the company as a safer relative bet.

The Infrastructure Boom

Beyond the software giants, both analysts agree the immediate investment opportunity lies in the massive infrastructure buildout required to power AI.

While Johnson focuses on the broad spending toward data centers, networking, and power, Freeman specifically highlighted the “memory trade.”

He recommended Micron Technology Inc. (NASDAQ:MU) and Lam Research Corp. (NASDAQ:LRCX) as primary beneficiaries of the surging demand for the massive amounts of DRAM memory required by increasingly large AI models.

GOOGL Surged 76% In 6 Months

Alphabet’s Class A shares soared by 76% over the last six months and 65% over the last year. On Monday, the stock rose 0.44% to $316.54 apiece.

Benzinga’s Edge Stock Rankings shows that GOOGL maintains a stronger price trend over the short, medium, and long term, with a poor value ranking. Additional information is available here.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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