Alphabet Just Introduced Its Newest AI Advantage, and It's Another Reason to Buy the Stock

By Geoffrey Seiler – Mar 29, 2026 at 4:30PM ESTKey PointsAlphabet's new compression algorithm could give the company another big cost advantage. The company's custom chips already give it an edge in this area. Alphabet (GOOGL 2.34%) (GOOG 2.49%) has already proven itself to be one of the most innovative companies in the area of artificial intelligence (AI). The company has developed one of the best AI models with Gemini, and it's a clear leader in AI video generation and image generation with Veo3 and Nano Banana. In fact, OpenAI recently shut down its competing AI video-generating app Sora, essentially ceding the market to Alphabet. Image source: The Motley Fool. Meanwhile, the company is also at the forefront of custom AI chips with its tensor processing units (TPUs). It developed these chips with the help of Broadcom more than a decade ago, and it has built an entire hardware and software ecosystem around them that not only provides optimal performance but gives it a huge structural cost edge. With its TPUs, Alphabet can train Gemini and run inference at a much lower cost than competitors that largely rely on graphics processing units (GPUs) from Nvidia. This is just an enormous advantage that grows over time as more and more computing power is required for AI. Alphabet's latest AI announcement, meanwhile, is set to expand its cost advantage even more. The company recently announced a new AI memory compression algorithm called TurboQuant that can significantly lower key-value (KV) cache memory needs and increase processing speeds with no data quality loss. This basically will help AI remember more information and help reduce cache bottlenecks. It said the algorithm will reduce working memory by at least 6x while increasing processing speeds by 8x. ExpandNASDAQ: GOOGLAlphabetToday's Change(-2.34%) $-6.58Current Price$274.34Key Data PointsMarket Cap$3.3TDay's Range$273.95 - $279.3752wk Range$140.53 - $349.00Volume36MAvg Vol33MGross Margin59.68%Dividend Yield0.31% Cloudflare CEO Matthew Prince called the announcement Alphabet's DeepSeek moment, referencing the AI model efficiency gains the Chinese company was reportedly able to achieve despite supposedly training its models on non-state-of-the-art, cheaper chips. Meanwhile, many people joked about the technology's similarities to the one developed by the fictional start-up Pied Piper in the popular HBO series Silicon Valley, which aired between 2014 and 2019. In the show, the company Hooli, which was based on Google, tried to actively strong-arm Pied Piper into gaining access to its compression technology. Why Alphabet stock is a buy While TurboQuant hasn't yet been deployed, it has the potential to once again grow the AI structural cost advantages that Alphabet has already established. In the coming years, AI progression is very likely going to come down to which companies can best drive down costs, and Alphabet is already at the forefront and looking to expand its lead in this area. That's why it's one of the best AI stocks to buy right now.Read NextMar 29, 2026 •By Will HealyGot $5,000? 2 Stocks the Fed's Rate Decision Just Made More AttractiveMar 26, 2026 •By Chris NeigerHere's Why Micron Stock Fell 12% This WeekMar 26, 2026 •By Travis HoiumGoogle's Massive AI Win: OpenAI Gives Up on VideoMar 26, 2026 •By Patrick SandersAlphabet and Amazon Are Quietly Winning the Artificial Intelligence (AI) Race While Microsoft Stumbles.

Should You Buy Either Stock Right Now?Mar 26, 2026 •By Geoffrey SeilerThe 1 Tech Stock I'd Buy With My Eyes Closed at This PriceMar 25, 2026 •By Geoffrey SeilerThe Best Stocks to Invest $50,000 in Right NowAbout the AuthorGeoffrey Seiler is a contributing Motley Fool stock market analyst covering technology, consumer goods, healthcare, energy, and materials stocks. Prior to The Motley Fool, Geoffrey was a senior equity analyst at Raging Capital Management, a $600 million long-short hedge fund. He holds a bachelor’s degree in history from Haverford College.TMFFindProfitStocks MentionedAlphabetNASDAQ: GOOGL$274.47(-2.30%)-$6.45AlphabetNASDAQ: GOOG$273.85(-2.45%)-$6.89*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.