Alphabet Soars to $4 Trillion Market Cap and Dominates AI Trade
On Monday, Alphabet Inc. surpassed a $4 trillion market capitalization, joining the ranks of a select few companies to achieve this milestone. Investors are increasingly recognizing the Google parent as a significant beneficiary of the artificial intelligence boom. Shares concluded the day with a 1 per cent increase, reaching $331.86, which corresponds to a market capitalization exceeding $4 trillion. The company has recently surpassed Apple Inc. to emerge as the second-largest firm, trailing only Nvidia Corp. Only Nvidia, Apple, and Microsoft Corp. have surpassed the $4 trillion mark, with Nvidia being the sole company to ever exceed $5 trillion.
Monday’s gain was fueled by the announcement that the company has secured a multiyear agreement with Apple to enhance the iPhone maker’s AI technology, which includes the Siri voice assistant. On Monday, Apple experienced an increase of 0.3 percent. Alphabet’s stock has increased by 6 per cent this year, adding to last year’s impressive rally of over 65 per cent, which positioned it as the leading performer among the Magnificent Seven. The increase by 2025 contributed nearly $1.5 trillion to Alphabet’s market valuation. The rapidly improving sentiment reflects that Alphabet is perceived as holding dominant positions across key areas of AI. Rave reviews for the company’s latest Gemini AI model have notably alleviated concerns regarding competition from firms such as OpenAI. Additionally, its tensor processing unit chips are regarded as a potentially significant catalyst for future revenue growth.
“The company’s competitive advantages are not only intact but growing, and no other player has the models, compute, applications, talent, and data to succeed in AI,” stated Divyaunsh Divatia. “It is certainly being seen as a significant AI winner, and that strength helps investors feel more at ease assigning it a more premium valuation than it previously received.” Shares are currently trading at approximately 28 times estimated earnings, which is close to their highest level since 2021 and significantly exceeds the 10-year average of 20.5. Alphabet’s multiple decreased to almost 14 in mid-2025.
Despite the increase in valuation, Alphabet remains priced at a modest discount compared to the broader Magnificent Seven Index. The company’s value credentials received a notable form of validation for a tech company, as Warren Buffett’s Berkshire Hathaway Inc. disclosed in November that it had acquired a stake in Alphabet during the third quarter. The stance reflects a significant vote of confidence from the renowned investor, who usually maintains a lower exposure to technology stocks.
