Google just closed its best year on Wall Street since emerging from the 2008 financial crisis. Alphabet's 65% stock gain in 2025—outpacing every other company valued over $1 trillion—wasn't inevitable. The year opened with an 18% plunge as investors questioned whether the search giant could survive the ChatGPT era. But product momentum, talent acquisition, and a favorable court ruling flipped the narrative. The inflection point is now clear: AI products aren't a threat to Google's core business. They're validating it.

The moment Google closed 2025, the narrative shifted entirely. An 18% plunge in the first quarter—Alphabet's worst quarter since mid-2022—seemed to confirm what skeptics had been saying all year: AI chatbots were coming for search, the core revenue engine that powered everything else. ChatGPT and Sora were capturing engagement. Advertising was supposedly doomed. Google's dominance looked vulnerable for the first time in a decade.

Then the trajectory flipped.

In April, Google promoted Josh Woodward, a 16-year company veteran, to lead the Gemini app—its direct answer to ChatGPT. That decision became the pivot point. Within months, Woodward's team shipped products that moved the market. In August came Nano Banana, the image generator feature that went viral when users realized they could blend photos into digital figurines. By September, Gemini surpassed ChatGPT at the top of Apple's App Store—a symbolic moment that said: the gap is closing.

But Nano Banana was just the visible marker. The real inflection was broader. Google's market share in generative AI traffic jumped from roughly 5% a year ago to 18% by this month, according to Similarweb data. Meanwhile, ChatGPT's share fell from 87% to 68%. That's not catching up. That's competitive repositioning. At this pace, Gemini gains 3-4 points of market share every quarter while OpenAI plateaus.

Google also made strategic moves on talent. The company paid $2.4 billion to acquire Varun Mohan and top researchers from Windsurf, the AI coding startup that had been in acquisition talks with OpenAI for $3 billion. Google essentially outbid OpenAI for critical engineering talent, consolidating its R&D advantage.

Then came the courtroom win—not exactly a victory, but a significant reprieve. In September, U.S. District Judge Amit Mehta ruled against the Justice Department's most severe penalties. Google could keep Chrome, continue paying Apple billions to remain the default search engine, and maintain the distribution advantage that underpins its empire. The antitrust case, which had hung over investor sentiment for months, suddenly became manageable.

The product cadence accelerated from there. Last month, Google announced Gemini 3—a faster, more capable model released eight months after Gemini 2.5. Each release showed velocity. Each one demonstrated that Google could innovate in AI at scale, not just execute.

What matters now is not Gemini's absolute market share, but what it does for Google's core search business. Analysts at Citizens wrote this week that the real tailwind is AI Overviews—Google's search-embedded service that provides AI-powered summaries. As the underlying models improved throughout 2025, answer relevance increased. That means higher engagement. Higher engagement means more ad impressions, which means more revenue. The fear that AI would cannibalize search is flipping: AI is making search stickier.

This is the inflection point investors were waiting for. Not a choice between search and AI. A future where AI amplifies search.

The scale of commitment backs this up. In October, CEO Sundar Pichai raised Google's 2025 capex forecast from $85 billion to $93 billion. Analysts now project $114 billion for 2026. On Google's October earnings call, Pichai revealed that the cloud business signed more deals over $1 billion in 2025 through Q3 than in the two prior years combined. That's not incremental growth. That's acceleration. Enterprise customers are voting with capital that Google's AI infrastructure is production-ready.

But here's the timing risk: valuations are pricing in execution now. Analysts project Q4 revenue growth of 15% or higher, and growth throughout 2026 in the low teens. That's solid but not transformational—especially at current multiples. The 65% rally happened because skepticism disappeared. Further gains require proof that capex spending translates to margin expansion, not just revenue growth.

Analysts at Pivotal Research raised their price target to $400, suggesting 28% upside, but they flagged a vulnerability: if OpenAI—one of Google's largest cloud customers—cuts spending or faces issues due to mounting obligations, "it is likely to get pretty ugly for AI stocks." That's the second-order risk no one wants to talk about. Google's cloud growth depends partly on OpenAI's willingness and ability to keep scaling compute. If that changes, so does the growth narrative.

For now, though, the market is betting on acceleration. The next critical moment is Q4 earnings in January. That report will determine whether product momentum and market share gains translated into actual revenue and margin expansion. If it doesn't, 2026 becomes a very different story. If it does, Google's 2025 isn't the peak—it's the inflection.

Google's 2025 inflection wasn't about overtaking OpenAI or becoming an AI startup. It was about proving that search plus AI equals durable competitive advantage. For builders, this means Gemini is now table stakes—the product legitimacy gap that existed in early 2025 has narrowed significantly. For investors, the near-term question is clear: Q4 earnings in January will validate whether market share and engagement gains convert to revenue acceleration. For enterprise decision-makers, Google's cloud infrastructure and $114B capex commitment through 2026 signals this is the infrastructure layer to standardize on. For tech professionals, Google's talent acquisition spree (Windsurf, researcher consolidation) shows where AI R&D jobs are concentrating. Watch January earnings, 2026 capex guidance, and OpenAI's spending trajectory as leading indicators.