Can Google be a parent Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) face increased competition in the search engine and cloud services markets? The company answered that question with an exclamation point this week.

On Wednesday, Alphabet announced its third quarter results. The tech giant reported revenue of $88.3 billion, up 15% year-over-year and above the $86.3 billion consensus estimate of analysts surveyed by LSEG. It posted earnings per share (EPS) of $2.12, beating the average estimate of $1.85. Unsurprisingly, Alphabet shares jumped on better-than-expected results.

Is Alphabet the best Action “The Magnificent Seven” buy now? That’s at least a strong “maybe.”

An extraordinary momentum

Sundar Pichai, CEO of Alphabet and Google, kicked off his third-quarter earnings conference call by saying, “The momentum within the company is extraordinary.” Even though top executives still support their companies, Pichai’s enthusiasm seems justified. Artificial intelligence (AI) is the main reason for his optimism.

After the launch of OpenAI’s ChatGPT, skeptics predicted that Generative AI could be a “Google killer”. About two years later, we see a very different reality. Google’s AI Overviews feature, which combines generative AI with its search engine, now reaches more than 1 billion monthly users.

Fears that this could hurt the company’s bottom line were overblown. Pichai said on the third-quarter call that Google has reduced machine costs per query by more than 90% over the past 18 months. He added: “Integrating ads into AI previews also works well, helping people connect with businesses when searching.”

Alphabet’s Google Cloud business is booming. The cloud unit raked in $11.4 billion in the third quarter, a 35% year-over-year increase. Google Cloud is now a major contributor to the company’s overall profitability.

Concerns about threats to YouTube from competitors such as TikTok have also proven to be more smoke than fire. YouTube ad revenue jumped 12% year over year in the third quarter, to $8.9 billion. Over the past four quarters, YouTube generated combined advertising and subscription revenue of more than $50 billion for the first time ever.

Alphabet’s Waymo unit now transports more than 150,000 paying customers and travels more than a million miles per week, all completely autonomously. Pichai said: “Waymo is now a clear technical leader within the automated vehicle industry and creates a growing business opportunity. »

AI also makes a huge difference to Alphabet internally. More than 25% of new code created within Google is now generated by AI. Of course, engineers review the code before accepting it. However, this is a major productivity milestone for the company.

Best Magnificent Seven action?

Does this momentum make Alphabet the best Magnificent Seven stock? Not necessarily. Other members of the Magnificent Seven also benefit from strong AI tailwinds. However, Alphabet compares favorably to several of them.

Microsoft reported strong revenue growth in its latest quarterly update. But its stock fell after reporting results this week due to lower-than-expected guidance.

Metaplatforms beat Wall Street estimates with its third-quarter results. Its shares, however, fell on analysts’ concerns about a significant increase in capital expenditure next year.

Tesla The stock climbed after the company last week reported better-than-expected earnings and optimistic guidance for 2025. However, its stock is still well behind Alphabet’s performance this year.

Amazon And Apple had not published their quarterly results at the time of writing. But no matter how impressive their numbers may be, Alphabet beats them both on one important front: valuation. The alphabet price/earnings/growth ratio (PEG) of 1.16 is well below the forward earnings multiples of Amazon and Apple.

I think the Magnificent Seven stock that gives Alphabet the best value right now is Nvidia. However, it’s still a mystery how much growth Nvidia will report in its third-quarter update scheduled for November 20.

The dark cloud of the alphabet

Probably the biggest factor that could keep Alphabet from being the best Magnificent Seven stock to buy right now is uncertainty related to antitrust lawsuits. A federal judge has already ruled that Google monopolizes the search engine market. Another lawsuit filed by the U.S. Department of Justice and several states alleges that the company also has a monopoly on its online advertising technology.

It is possible that Alphabet could be broken up as a result of these antitrust actions. Even otherwise, the company could be forced to change its business practices in a way that would harm its long-term growth prospects.

Alphabet’s current momentum is impressive enough to put it in the upper echelon of Magnificent Seven stocks, if not at the top. However, the dark cloud hanging over the company with its antitrust risks somewhat diminishes its magnificence.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Speights holds positions at Alphabet, Amazon, Apple, Meta Platforms and Microsoft. The Motley Fool holds positions and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.