Google parent Alphabet soars past $2 trillion market cap on AI strength

livemint.com:

Alphabet is tremendously well managed, its free cash flow is absolutely astonishing, and it has a massive R&D budget, so while no one knows what company will have the best AI products, this is a tough one to bet against," said Wayne Kaufman, chief market analyst at Phoenix Financial Services. While the stock breached the $2 trillion level on an intraday basis in 2021, and again earlier this month, this is the first time Alphabet has closed above it. Doing so puts it into rarefied territory — only Apple Inc., Microsoft Corp, Saudi Aramco, and Nvidia Corp.

have surpassed the threshold. Nvidia — driven by the massive demand for its AI chips — surpassed $2 trillion earlier this year, while Amazon.com Inc. isn’t far from $2 trillion itself.

The path to $2 trillion has been somewhat rocky. The stock has been volatile amid some high-profile criticism about the company’s AI offerings, and prior to the latest report, some investors had questioned its ability to compete with firms like OpenAI in this critical area despite spending heavily in the field for years. Wall Street remains broadly positive on the stock, as nearly 85% of the analysts tracked by Bloomberg recommend buying.

Both earnings and revenue are expected to grow at a double-digit pace every year through 2026. In addition, the stock continues to look like something of a bargain. Shares trade around 23.5 times estimated earnings, making it among the cheapest of the so-called Magnificent Seven.