Investors rushed into artificial intelligence (AI) stocks in recent years, causing valuations to soar. However, a recent selloff has hit tech and AI stocks due to concerns about high valuations and slow results. Seasoned investors see opportunity when excitement fades. But what is smart money doing now?

Many tech companies heavily invested in AI, affecting margins and revenue growth. AI stocks are under scrutiny for lofty valuations. Factors like profit-taking by large funds, market shifts, and geopolitical uncertainty contributed to the recent selloff. Yet, savvy long-term investors focus on fundamentals and cash flow strength.

Alphabet’s (GOOGL) stock has risen 745% in the last decade, showing consistent revenue and earnings growth. Despite the recent tech selloff, CEO Sundar Pichai called it a “tremendous quarter,” demonstrating strong AI growth across major business lines. Alphabet has integrated AI across various products since 2017, making it a full-stack AI leader.

Alphabet reported an 18% YoY revenue increase in Q4 2025, reaching $113.8 billion, with earnings up 31% to $2.82 per share. Search remains a strong growth driver, with an 89.8% market share. Google Cloud revenue increased by 48%, and enterprise AI demand is growing. Alphabet continues to invest in AI infrastructure wisely.

Alphabet plans to invest $175-185 billion in capital expenditure in 2026. Analysts expect revenue to grow by 16.6% in 2026 and 14.8% in 2027. With a forward earnings multiple of 22, GOOGL is seen as a reasonable buy. Wall Street analysts rate it a “Strong Buy,” with a potential upside of 19% in the next 12 months.

Wall Street is optimistic about the long-term AI story, with GOOGL rated as a “Strong Buy” by 46 out of 55 analysts. The stock has no sell recommendations, and the average price target implies a potential 19% upside. With a high price estimate of $420, there is a possibility of a 33% increase from current levels.

Read more at Yahoo Finance: Why Smart Money Buys When AI Stocks Pull Back