The wind in Silicon Valley has shifted! Alphabet(GOOGL.US) has regained the top spot with Gemini 3, and Wall Street is turning its guns to aggressively attack the OpenAI ecosystem.

Alphabet (GOOGL.US) is making a strong push to challenge OpenAI, highlighting Wall Street’s recognition of this Google parent company as an AI leader. Just a year ago, investors believed it was severely lagging behind competitors and punished its stock price accordingly.

Tongtong Finance APP notes that during Wednesday’s earnings call, Alphabet executives displayed a more confident stance. This was the first earnings call since the release of the Gemini3 model, which impressed users and helped Google catch up in the AI race.

Although Alphabet did not explicitly mention secondary AI competitors, its newfound confidence emphasizes a key contrast: investments in AI are beginning to pay off across the company.

This has become the reason for Alphabet’s plan to nearly double capital expenditures by 2026—to between $175 billion and $185 billion—funds that will be used for large-scale investments in AI computing power.

In its 2025 AI readiness speech, Alphabet focused on product usage and AI revenue generated specifically by its cloud computing division. “Overall, we see AI investments and infrastructure driving revenue and growth across the board,” said CEO Sundar Pichai.

Google’s renewed confidence in AI-driven revenue is supported by growth in its consumer and enterprise businesses.

Pichai stated that the Google Gemini application, competing with OpenAI’s ChatGPT, had over 750 million monthly active users at the end of the December quarter, up from 650 million at the end of the previous quarter.

Nevertheless, this number still lags behind ChatGPT, which OpenAI CEO Sam Altman said in October had surpassed 800 million weekly active users.

Pichai said, “We also see a significant increase in engagement per user, especially since the release of Gemini3.”

Gemini3 has also been integrated into Google Search’s “AI mode” and supports Google’s enterprise version Gemini. Pichai revealed during the call that the enterprise version has reached 8 million paid licenses.

Google’s surge in capital expenditure forecasts initially unsettled investors, causing the stock to drop as much as 6% in after-hours trading. However, its strong cloud performance (revenue growth of 48% in the December quarter) and other AI-driven business boosts quickly reassured Wall Street that Google’s AI bets are beginning to pay off.

The stock recovered from the initial after-hours dip, trading flat, further confirming the message currently being conveyed to the tech sector: only when tech companies can demonstrate corresponding financial returns can soaring AI spending be sustained.

Turning the Tide

Since early last year, Alphabet has transformed from a laggard among the “Big Seven” to a leader. Among companies with a market value exceeding $4 trillion, only Nvidia and Apple are on equal footing with it.

While Microsoft has taken a relatively cautious approach to capital spending this year, its stock was still heavily hit last week, partly due to growing market concerns over its reliance on OpenAI. Microsoft stated that its third fiscal quarter spending would be below the record $37.5 billion from October to December.

As OpenAI, despite still operating at a loss, has finalized a series of billion-dollar deals, investors have begun to worry about its ability to fund these commitments, leading to negative sentiment toward large tech companies closely tied to it.

Paul Micks, head of tech research at Freedom Capital Markets, said that although the capital expenditure forecast is “stunning,” Alphabet is benefiting from contrasting market sentiment.

“I do believe a narrative is forming that the market favors Google over OpenAI,” Micks said. “Last year at this time, every partnership announcement from OpenAI was met with applause. But by the end of 2025, people started saying: ‘Wow, so much of my revenue backlog or AI infrastructure spending is coming from OpenAI.’”

Oracle has over $500 billion in backlog contracts, much of which depends on OpenAI, and its stock has fallen about 49% since early October. Microsoft, which holds a 27% stake in OpenAI and considers it a major client, has fallen over 20% in the same period.

Meanwhile, Alphabet has risen about 36%.

Dan Morgan, portfolio manager at Synovus Trust, said, “The agreements between OpenAI, Microsoft, and Oracle are highly tied to their future funding capabilities. I think that’s why Wall Street is leaning toward Alphabet.”

Alphabet’s strong financial position is thanks to major deals struck in recent months that power products and infrastructure for companies like Meta and Apple.

Eric Clark, portfolio manager at LOGOETF, said, “If you’re a software company tied to OpenAI, then you’re losing appeal. Right now, Google is the one in control.”