Alphabet Hits $2T Market Cap on AI Demand

On April 26th, Alphabet, Google's parent company, reached a market capitalization of $2 trillion for the first time, making it the fourth U.S. company in history to achieve this milestone. Its current market cap stands at $2.15 trillion, trailing only behind Microsoft, Apple, and Nvidia. Following a strong earnings report, its first-ever dividend payout, and the announcement of a large-scale stock buyback plan, Alphabet's stock surged by 10.22% to $171.95 per share, marking the largest single-day gain since July 2015.

Financial data showed the company's revenue for the quarter ending in March was $80.5 billion, with earnings per share of $1.89, surpassing market expectations of $78.7 billion and $1.51 per share. Google's advertising revenue from "Google Search and other" sources reached $46.2 billion, beating the forecasted $45 billion. Revenue from Google Cloud services was $9.6 billion, up 28% year-over-year, exceeding the expected $9.4 billion, driven by growing demand for AI-related computing. YouTube's performance also exceeded expectations.

Sundar Pichai, Alphabet's CEO, stated, "The first-quarter results reflect the strong performance of Search, YouTube, and Cloud businesses. Our leadership in AI research and infrastructure, combined with our global product offerings, establishes a solid foundation for the next wave of AI innovation."

Wall Street analysts anticipate Alphabet's continued growth following a brief downturn in February and March. Forrester analyst Nikhil Lai highlighted that strong revenues from Search and YouTube suggest that uncertainties in conversational search monetization and brand media measurement challenges have not affected Alphabet's bottom line.

Wedbush analyst Dan Ives mentioned in a report, "Rumors of Alphabet's decline have been greatly exaggerated." He emphasized the accelerated growth in cloud computing and the increased contribution from AI, stating that first-quarter results further validate Google's position as a leading AI beneficiary and that management's comments directly address the structural risks of generative AI to the search business. Ives maintained his "outperform" rating on the stock with a price target of $205.

On the same day, Nvidia's stock also surged 6.90% to close at $877.35, up 6.18%. This week, Nvidia's stock rebounded significantly, gaining over 15% from last week's sell-off, adding nearly $290 billion in market cap. Analysts attribute Nvidia's strong rebound to increased AI investments by major clients such as Meta, Alphabet, and Microsoft, who have all recently committed billions of dollars to AI investments.