Google Just Made a Deal with AI Coding Startup Replit. What Does That Mean for GOOGL Stock?

Artificial intelligence brought with it some home truths about how this revolutionary tech will affect the job market. While many clamored about the number of jobs that will disappear, optimists countered that argument that several new ones will be created. One of them is “vibe coding.”

What is Vibe Coding, and Why Is Google Interested In It?

Vibe coding is a new approach to software development where a user describes their project goal or desired app feature in plain, natural language, and an artificial intelligence model generates the functional code to achieve it. This essentially means that anyone can become a coder and build their own apps or digital platforms. Being conversant with complex coding languages is not a necessity. However, being clear with one's thought process will be.

Recently, tech titan and the cynosure of the AI trade, currently, Alphabet (GOOG) (GOOGL), announced a partnership with the vibe coding platform, Replit. Under the terms of the partnership, primarily focused on enterprise customers, Replit will expand the integration of Google's models into its platform to support vibe coding.

Commenting on the partnership, Replit CEO Amjad Masad said, “The goal for us, and Google, is to make enterprise vibe-coding a thing. We want to show the world that these tools are actually going to transform businesses and how people work. Instead of people working in silos, designers only doing design, product managers only write … now anyone in the company can be entrepreneurial.”

Replit and Google: A Perfect Combo

Notably, Replit, founded in 2016, operates on a freemium model combined with a high-growth usage-based enterprise model, with three primary streams of revenue. These include the primary vibe coding avenue, then revenues from subscription plans, and finally the marketplace. 

While in the vibe coding model, users and businesses pay for the compute and model usage of Replit's advanced AI features, such as Replit Agent. The subscription aspect of the revenue model involves two products: Replit Core (for individual users) and Teams/Enterprise for enterprise users. Finally, there is the marketplace model wherein Replit generates revenue by facilitating transactions within its community.

All this has led to Replit having a user base of more than 40 million at the end of 2025, from just 750,000 in 2016, and a valuation of $3 billion, following its latest $250 million fundraise in September. Though Replit's growth has been noteworthy, it still lags its peers like Cursor ($29.3 billion) and Cognition AI ($10.2 billion) in terms of valuation today.

Then what good will the expansion of this partnership do for Google?

Well, for starters, the most direct reason is to put their cutting-edge AI models, like Gemini, to work in a highly visible and high-usage environment. Replit has tens of millions of users. Integrating Gemini into the Replit environment means every time a user prompts the AI to generate or debug code, it drives significant "token usage" on Google Cloud, which is a direct source of revenue for Google. Finally, this partnership provides Google with a massive, real-world data and feedback loop to continuously improve the performance, quality, and safety of its AI models for coding tasks.

Alternatively, while this deal makes Google Cloud the primary cloud provider for the entire Replit platform, Google sees this as a way to turn non-coders (like product managers, designers, or business experts) into software creators, a relatively untapped market with serious monetization potential.

Alphabet's Envious Financials

With a new paradigm in revenue generation expected to be unlocked through this expansion of its existing partnership with Replit, Google's already robust financial position is expected to become stronger.

Over the past decade, Alphabet has delivered strong, consistent expansion, posting compound annual growth rates of 18.31% for revenue and 23.43% for earnings per share. The stock has been on a tear this year as well, with it up about 65% on a year-to-date (YTD) basis, bringing its market cap to $3.9 trillion.

Coming back to the financials, the third quarter of 2025 continued that pattern of excellence, with the company comfortably exceeding estimates on both top and bottom lines. Total revenue reached $102.3 billion, reflecting 16% year-over-year (YoY) growth. Within that figure, Google Services contributed $87.1 billion (up 14%), while Cloud revenue advanced 34% in the same period to $15.2 billion. Earnings per share climbed 35.4% to $2.87 per share, well above the $2.26 consensus forecast.

Search advertising, the traditional cornerstone, generated $56.6 billion, a solid 14.5% increase from the prior year.

Cash generation remained exceptional in the quarter, too. Operating cash flow surged to $48.4 billion from $30.7 billion in the comparable quarter last year, and Alphabet closed September with $23.1 billion in cash and equivalents alongside zero short-term debt.

That said, valuation metrics have become stretched not only relative to the broader sector but to their historical averages as well. The forward price-to-earnings ratio stands at 30.58, price-to-sales at 9.69, and price-to-cash-flow at 24.69, each markedly above its own five-year averages of 23.82, 5.89, and 7.39, respectively.

Analyst Opinion on GOOGL Stock

Thus, analysts have earmarked an overall rating of “Strong Buy” to the GOOGL stock, with a mean target price of $324.88. This indicates an upside potential of about 1.1% from current levels. Out of 54 analysts covering the stock, 43 have a “Strong Buy” rating, four have a “Moderate Buy” rating, and seven have a “Hold” rating.