Google-parent Alphabet nears $4 trn mark: What drove its valuation?

Alphabet, Google’s parent company, is approaching a valuation of $4 trillion, marking a major milestone for the company. According to Reuters, Alphabet’s market value reached about $3.82 trillion this week, bringing it very close to becoming one of the world’s few companies to touch the $4 trillion mark.

What drove Google's valuation?

According to the report, the latest surge in valuation came on the back of strong investor confidence and renewed belief in Google’s position in the fast-growing artificial intelligence (AI) industry.

 

After the launch of ChatGPT in 2022, some investors believed Google was falling behind competitors in the AI race. Many felt that other companies were moving faster in commercialising AI tools. However, Google has made a strong comeback this year, especially with the Gemini 3 model, which has received positive reviews, further boosting confidence in its AI strategy. 

 

Earlier this year, Google’s Gemini 'Nano Banana' model went viral, driving a huge spike in reach and user growth. According to Google, over 10 million new users joined the Gemini app shortly after the Nano Banana editor launched, and more than 200 million images have already been created or edited.

 

Alphabet is also benefiting from major improvements in its cloud business. For many years, Google Cloud was behind larger competitors, but now it has become one of the company’s biggest growth drivers. According to Reuters, the business has shown strong performance and has even attracted major investors, including Berkshire Hathaway.

Which companies have $4 trillion valuation?

With the latest surge, Alphabet is now close to joining a small group of companies that have reached a $4 trillion market valuation. According to Reuters, Nvidia, Microsoft, and Apple have previously crossed the $4 trillion mark.

 

However, currently, only Nvidia and Apple remain in that exclusive valuation club. If Alphabet crosses the mark, it will become the fourth company in history to reach this level.

Google's stock rose 70% this year

Alphabet’s stock price rose more than 5 per cent on Monday to reach a new record of $315.9 per share, giving the company its near-$4 trillion valuation. Reuters reported that Google’s stock has gone up nearly 70 per cent so far this year, performing far better than rivals such as Microsoft and Amazon. Much of this growth has come from improved business performance, more efficient operations, and stronger investor confidence. 

Google avoided major penalties, breakup

The tech giant's share price also strengthened because it managed to avoid major penalties or forced breakups from recent antitrust investigations in the US.

 

In October 2020, the US Department of Justice (DOJ) filed an antitrust case against Google seeking its breakup, citing a monopoly. But in September this year, a US federal court allowed Google to keep products like YouTube and Chrome under the same company rather than spin them off. The court ruled that the rapid growth of generative AI, led by tools such as OpenAI’s ChatGPT, has increased competition.

 

This outcome helped reassure investors that major structural changes are unlikely in the short term.

Existing concerns

According to Reuters, there are concerns that market valuations today could be showing signs similar to the dot-com boom of the late 1990s, where prices rose sharply before a major crash. The close relationships and business deals between companies like OpenAI and Nvidia, two of the companies at the heart of the AI boom, have also raised concerns.

 

However, many analysts believe Alphabet remains well-positioned for the future, given the company has several advantages, including strong cash reserves, its own AI chips that reduce dependence on Nvidia’s expensive processors, and the world’s largest internet search platform, which is already gaining from new AI integration.