Alphabet Inc., the parent company of Google has reportedly reached a milestone by closing more than USD 2 trillion market capitalization for the first time in its lifetime. The achievement was made official when a robust earnings report surfaced, that highlighted the strength in artificial intelligence (AI).
As per the report, Alphabet's stock reportedly surged by 10 per cent to USD 171.95, marking it as the largest one-day gain since its inception (from July 2015). This propelled the company's value to USD 2.15 trillion and added around USD 200 billion to its market capitalization. By this year, Alphabet has shares have also grown by 23 per cent, outperforming the Nasdaq 100 Index.
Cloud computing and AI fuel growth
Alphabet's impressive revenue performance was driven by its cloud-computing unit, which witnessed the demand growing up with the advancement in AI technology. The tech giant further introduced a dividend and announced a USD 70 billion buyback program to upgrade investors’ confidence.
Joining elite company
Alphabet's achievement has placed it in the selected group of companies which has a market cap that exceeds USD 2 trillion. Furthermore, it could also join the ranks of Apple Inc., Saudi Aramco, Microsoft Corp and Nvidia Corp.
It is worth noting that Nvidia reached the milestone of USD 2 trillion earlier this year (2024), which was further driven by high demand for its AI chips.
What were the challenges and opportunities in AI development?
This is worth stating that despite the success, Alphabet also faced several criticisms in regards to its AI offerings, which were led by volatility in its stock performance. Some investors also questioned the ability of the company on how are they going to compete with the existing leading AI firms like OpenAI.
However, it was stated that Alphabet has been committed to investing in AI research and development.
Positive outlook and market position
Wall Street analysts were bullish on Alphabet's stock, with around 85 per cent recommending buying. Strong earnings and revenue growth have further been reported to the project by 2026.
Furthermore, the company’s stock has been considered relatively undervalued compared to its peers, it has traded at a discount of the Nasdaq 100 and modestly above its 10-year average multiple.
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