The communications services sector, where Alphabet is located, has surged over 26% this year, making it the best-performing sector among the major indexes, with information technology close behind.
A year that has seen so many milestones in the tech industry, Alphabet, Google’s parent company, is joining the list. They have just hit a historic milestone, joining the $3 trillion club on Wall Street. Despite facing numerous regulatory challenges, reaching this milestone is a significant win for them. Alphabet’s rise is the new narrative shaping the technological era.
Google parent Alphabet has hit a market capitalization of $3 trillion for the first time on Monday. This increase can be fueled by renewed excitement around development in artificial intelligence and the recent antitrust victory.
The company’s shares soared to record highs, with Class A stock climbing 3.8% to $250 and Class C shares up 3.7% at $250.40.
So far this year, Alphabet’s shares have jumped over 32%, making it the top performer among the so-called “Magnificent 7” tech stocks and leaving the S&P 500’s 12.5% gain in the dust. With this achievement, Alphabet now joins Apple and Microsoft in the exclusive $3 trillion club, though Nvidia, the leader in AI chips, stands even higher with a $4.25 trillion valuation.
Tech and AI-related stocks have been driving the market to new heights lately, as investors grow increasingly hopeful that the Federal Reserve will lower interest rates soon. Oracle’s strong forecast last week only added fuel to the AI trend.
According to Kim Forrest, Chief Investment Officer at Bokeh Capital Partners, tech stocks have been leading the market rally, and no other sector has generated as much excitement among investors over the past year and a half.
The communications services sector, where Alphabet is located, has surged over 26% this year, making it the best-performing sector among the major indexes, with information technology close behind.
Investor confidence also got a boost after a recent US court decision let Alphabet keep control of its Chrome browser and Android operating system, considering the company’s dominance in search and mobile has long been under the microscope. While the ruling requires Alphabet to share some data, which could help rivals in the advertising space, not having to spin off Chrome or Android has relieved a major concern for investors.
On the business side, Alphabet’s cloud division reported a nearly 32% jump in second-quarter revenue in July, beating expectations as the company’s investments in its own chips and its Gemini AI model started to pay off. The company has also increased its 2025 capital spending forecast by $10 billion, now planning to spend $85 billion, and hinted at even higher investments next year to keep up with booming cloud demand and stay ahead in the AI race.
These strong results are encouraging for other tech giants, such as Microsoft and Amazon, both of which are also ramping up their data center spending and operating even larger cloud businesses.
Dennis Dick, chief strategist at Stock Trader Network, noted that while Alphabet still depends heavily on search, investors are increasingly seeing the company’s potential beyond that from YouTube to Waymo.
Despite all this growth, Alphabet’s stock is trading at about 23 times its expected earnings and only slightly above its five-year average of 22, according to LSEG data.
As companies recognize the growing importance of artificial intelligence, they will continue to make investments in AI and cloud computing. As the company ramps up spending on innovation, rivals such as Microsoft and Amazon are likely to feel the heat. The impact of these developments will become clearer over time.