The giant Alphabet approached the threshold of a market valuation of 4.000 billion dollars this Monday, a performance that determines it to join a very select group of companies. Only Nvidia and Apple are currently there, and Microsoft has also reached this level in the past.
Alphabet shares rose more than 5% to hit a new all-time high of $315.9, giving the company a market capitalization of $3.825 billion. This progress marks a spectacular jump of almost 70% since the beginning of the year, clearly outperforming its direct competitors in the AI race, Microsoft and Amazon.
Return to grace
This price spike reflects a change in sentiment among investors. Once ChatGPT launches in 2022, there are concerns that Alphabet will lose its technological edge, even though the company is behind much of the technology behind generative AI.
Alphabet took the initiative again this year by turning its cloud business into a major growth engine. A key element of the stock’s comeback was the acquisition of 17.8 million shares by Berkshire Hathaway, Warren Buffett’s parent company. Steve Sosnick, chief analyst at Interactive Brokers, identified the stock as a major pull factor for investors.
“While it’s unlikely that Warren Buffett had a direct role in this purchase, the market still follows the premise that whatever Berkshire does is worth emulating, and frankly, it’s been working for a long time.”Steve Sosnick analysis.
The recent launch of the next-generation language model, Gemini 3, has also had a positive impact “extra push” to act.
Direct competition with Apple and its threats “bubble” technology
With a capitalization of $3.825 billion, Alphabet is less than 5% of the $4,000 billion threshold. The company is now just $228 billion shy of Apple’s valuation. If Alphabet manages to overtake Apple, it will become the second largest American company for the first time since 2018.
Google’s stock rally also comes as the tech giant manages to emerge unscathed by a bipartisan antitrust push launched during President Donald Trump’s first administration. The company escaped a forced sale of its Chrome browser after a court ruled that its search activities constituted an illegal monopoly, but refused to order its dismantling.
The specter of an AI bubble
This enthusiasm for AI and skyrocketing valuations is cause for concern. Some business executives worry about a disconnect between market movements and economic fundamentals, raising the specter of a bubble, potentially comparable to the Internet stock boom of the late 1990s.
These concerns are reinforced by a series of crossover deals involving OpenAI and Nvidia, two of the most central players in the AI boom.
Google’s structural advantages over Nvidia
Despite doubts about valuation, analysts agree that Google remains well positioned in the AI race. This belief is based on several structural forces. Alphabet has strong cash flow, internally developed chips – an alternative to expensive Nvidia processors – and a vast web search empire that is already powered by AI.
At the same time, the Stoxx technology sector rebounded by 1.29% on Monday, after falling 2.33% in the previous week. The monetary policy pause has removed doubts about the technology, after a period of high volatility.
