There are several great companies capitalizing on the artificial intelligence (AI) boom that would make solid stocks to buy right now. But among leading tech giants, Alphabet (GOOG 1.27%) (GOOGL 1.23%) stands out.

The stock is up over 75% since hitting a 52-week low in April, but it still trades at a reasonable valuation. With 2 billion users and one of the best enterprise cloud services available, Alphabet is well-positioned to help investors outperform the market.

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How Google is benefiting from AI

Earlier in the year, some investors were concerned about Google’s competitive position as more people started using ChatGPT and other models to look up information. This overlooked the power of Google’s Gemini AI model, which has emerged as one of the best models out there.

Gemini powers all the company’s consumer services, like Search, and it is making a difference in the company’s financial performance. Revenue from Search — the company’s largest business — grew 12% year over year in the second quarter. This momentum reflects increasing search queries with AI Overviews.

Google is also competitively positioned in cloud services. The number of new customers using Google Cloud jumped 28% quarter over quarter in Q2. Management credits this momentum to its global base of AI-optimized data centers, custom AI chips, storage, and software offerings.

It can’t be emphasized enough that Google’s AI capabilities are only possible because of the company’s substantial free cash flow. It generated $67 billion in free cash flow over the last year, while spending $67 billion in capital expenditures for technology and AI infrastructure.

Google has the resources to deliver the best AI experiences for its users, yet Alphabet stock trades at a forward price-to-earnings multiple of 25. That’s a reasonable multiple to pay for a company that just reported a 22% year-over-year increase in earnings last quarter.