Bits, Bytes, and Bottom Lines: A Prudent Look

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Right then. Artificial Intelligence. Everyone’s talking about it, naturally. It’s the new alchemy, only instead of turning lead into gold, they’re turning venture capital into… well, hopefully more venture capital. Nvidia, a name that once conjured images of graphics cards for wizards and gamers, now boasts a market capitalization approaching the GDP of several small, reasonably well-governed island nations. And private concerns like OpenAI and Anthropic are hoovering up funds faster than a troll under a bridge.1

A considerable sum, wouldn’t you agree? One might suspect the well is running dry. But, no. The thing about wells is they often have unexpected springs. While some of these ‘AI’ stocks are priced as if they’ve already solved the problem of consciousness (and, frankly, good luck with that), there remain opportunities. Companies that haven’t yet asked for a king’s ransom, but are nonetheless positioned to benefit from this… digital efflorescence.

Let’s examine a couple, shall we? Not as recommendations, mind you. Just… observations. A prudent investor observes. A very prudent investor has a good accountant.2

Alphabet: The Quiet Magician

The most underestimated beneficiary of this whole affair might be Alphabet. Yes, the conglomerate that owns Google, YouTube, Android, Waymo, and a disconcerting amount of data. They’re not shouting about it, you see. They’re not building gleaming towers of silicon and proclaiming themselves the Masters of the Algorithm. They’re just… quietly accumulating power. Like a particularly efficient goblin treasurer.

All their ventures stand to gain. Google Search, for example, now uses AI to sift through the endless chaos of the internet, making it marginally easier to find information. More queries mean more opportunities to show advertisements, which, last quarter, brought in a tidy $63 billion. A significant sum, even after accounting for the cost of appeasing the Search Engine Optimisation shamans.3 This enhancement applies across the board – YouTube suggesting videos you didn’t know you wanted to watch, Waymo attempting to navigate the complexities of human drivers.

The Gemini chatbot, currently boasting 750 million monthly active users, is also contributing. It’s a clever piece of software, though I suspect it spends most of its time arguing with itself about the meaning of life. Revenue is trickling in from paying users and businesses, which is… encouraging.

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But the real magic is happening with Google Cloud. Revenue jumped an astonishing 48% last quarter to $17.7 billion, and margins are improving. Apparently, a great many other AI companies are using Google Cloud’s data centers and expertise to power their own endeavors. It’s a bit like renting a forge to a blacksmith. A very, very large forge.

Alphabet currently trades at a price-to-earnings ratio of 29, which, given a consolidated revenue growth of 18% year over year, isn’t entirely unreasonable. A solid, if unexciting, investment. A bit like a well-maintained garden gnome.4

Amazon: The Reluctant Alchemist

Amazon. A company once thought to be lagging behind in this digital gold rush. Their cloud division, while still substantial, isn’t growing as quickly as some of the competition. They don’t have a leading AI chatbot, though they do have Rufus, which, I’m told, is quite adept at suggesting things you already bought.

What Amazon does have, however, is a lucrative relationship with Anthropic, an AI lab that appears to be fuelled entirely by venture capital and optimism. Anthropic’s core cloud computing partner is Amazon Web Services (AWS), and they’re even collaborating to optimize custom-built computer chips for training and running AI models. It’s a symbiotic relationship, though one suspects Anthropic is doing most of the growing.

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Anthropic’s revenue has exploded, from a run rate of $100 million two years ago to $14 billion today. Much of this revenue is being reinvested into AWS, fueling further expansion. A virtuous cycle, if you ignore the underlying fragility of the whole endeavor.

AWS revenue growth accelerated to 24% last quarter, reaching $35.6 billion. A significant portion of this growth can be attributed to Anthropic and their insatiable appetite for computing power. If Anthropic continues to grow at this rate, we can expect even further acceleration in 2026.

And, of course, Amazon still has its core AWS division and its dominant e-commerce marketplace. Retail sales in North America hit $426 billion in 2025, up 10% year over year, with expanding profit margins. It’s a bit like having a reliable dragon guarding your treasure.

Amazon trades at a P/E ratio of 29, similar to Alphabet. Both businesses appear poised for healthy double-digit revenue growth in 2026, which should translate into decent returns for shareholders who choose to invest in March. A prudent choice, perhaps. Though, as any seasoned investor knows, the market is a fickle beast. And sometimes, even the most carefully laid plans go awry.5

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2026-03-01 18:52