Alphabet is the closest thing in tech to a one-stop AI shop, with a frontier model, a fast-growing cloud-computing business, a major in-house chip effort and a large core advertising business.

That diversity of vibrant pursuits should be a huge advantage in the more uncertain, capital-constrained phase that the AI boom is now entering. Yet the Google parent’s stock isn’t getting as much love from investors as its peers, including a nearly 10% drop in after-hours trading Wednesday after reporting third-quarter ad-sales growth that missed analysts’ forecasts.

Microsoft, which beat analysts’ forecasts with a 19% rise in quarterly revenue in its own results, was trading at a forward price-to-earnings ratio of about 25 at the Wednesday close—a premium to Alphabet’s ratio of around 20 times.

Microsoft does have a sticky core corporate software customer base and a big cloud-computing business in Azure, which boosted revenue by 48% in the third quarter. It doesn’t have a frontier AI model of its own. Nor does it have an AI chip business as well-developed as Google’s.

Other tech giants have some of Google’s ingredients, but none has everything. Amazon.com has a huge e-commerce operation that sets it apart, alongside the world’s largest cloud-computing operation and a strong AI-chip business. But it doesn’t have a frontier model. Meta Platforms has a leading AI model but no significant cloud-computing business, and its AI chip effort isn’t that far along. Both of those companies trade at higher multiples than Alphabet.

So why is Google seen as a laggard? AI agents could erode its search-engine dominance, financing needs for its AI ambitions are sky-high, and it doesn’t have a consumer AI agent app that matches up exactly with what Meta, OpenAI and Anthropic offer.

Those are all legitimate challenges. But Google has arrows in its quiver to fend off all of them.

AI’s threat to Google’s search franchise has long been overstated. Alphabet’s ad revenue isn’t growing as fast as Wall Street wants—its third-quarter revenue of $82 billion was up by around 10.5%, lower than analysts’ forecasts.

But the company’s integration of AI tools into its search engine has been well received among users and hasn’t been fully monetized. The company is only now expanding ads in its AI Mode search function internationally, Chief Business Officer Philipp Schindler said Wednesday. The company’s Gemini app is also growing strongly: It surpassed one billion users, the company said Wednesday. That could provide another lever for ad growth.

A bigger problem in the long term may be how the company works advertising into its AI offerings while maintaining its search dominance. There is a tension between users who want AI-driven search results that aren’t influenced by advertisers and Google, which has an interest in serving up as many ads as it can.

Still, that is a problem for nearly everyone pursuing AI. And Google has a leg up over some competitors, like OpenAI, that have little experience building and growing an advertising business.

Alphabet’s capital needs present another challenge it is relatively well equipped to overcome. The company is planning capital expenditures of around $200 billion this year, increasing to an analyst forecast of about $312 billion next year, according to FactSet.

That is a lot of money at a time when AI-linked bond yields are going up and jitters about the AI boom abound. But Alphabet has been shrewd about acting early to secure financing and had $265 billion of cash and marketable securities at the end of the third quarter—more than any other big tech company. As the AI boom shifts to a period where staying on top hinges on access to capital, it at least has a head start on rivals.

One new area where Google has yet to assert its advantages, however, is in consumer AI agents. Meta has taken pole position there with its Muse agent, which has amassed over 10 million downloads since it launched in September.

Google has yet to launch a dedicated AI agent app for consumers. Instead, it launched an agent for businesses early this month, pitching it as an all-purpose tool that answers questions, manages work tasks and writes code.

That slower approach could easily win the day. Agents are buzzy, but they are also risky—as evidenced by recent agent-driven cyberattacks—and are largely untested on a mass scale. Rolling them out to businesses gives Google experience and feedback from a narrower set of sophisticated users before pushing them onto a bigger and more unwieldy set of consumers.

Chief Executive Sundar Pichai nodded to that dynamic on Wednesday, saying on a call with analysts that the company rolled out a Gemini agent to companies first “because they have the highest bar for security, governance and controls.”The company would bring that experience to consumers later this year, he said, starting with the billion users of its Gemini app.

Cloud-computing growth and Google’s AI chips, which Anthropic is spending billions of dollars on, have been driving its earnings lately. The company’s operating margins expanded in the third quarter to 32% as cloud revenue skyrocketed, suggesting big AI investments aren’t eroding core profitability.

On the other hand, rising depreciation charges, largely on computing equipment—they totaled $8.4 billion in the third quarter, up 49% from a year earlier—are something of a drag on margins. And the company’s heavy spending is likely to leave it free-cash-flow negative for some time.

But that will be true for others, too. And few are better-prepared for this stage of the AI era than Alphabet—a position that markets aren’t fully reflecting.