Alphabet Approaches $4 Trillion Valuation. Does the Stock Have Further Room to Grow?

Alphabet Emerges as Top Magnificent Seven Performer in 2025

Photo credit: Kevin Carter / Getty Images

Highlights

• Alphabet surpassed Apple to become the second most valuable U.S. company on Wednesday, and its stock continued to climb on Thursday, bringing its market value close to $4 trillion.
• In 2025, Alphabet's shares jumped 65%, fueled by enthusiasm for its Gemini 3 AI model, the success of its proprietary AI chips, and a robust advertising business.

Alphabet, the parent company of Google, finished 2025 on a high note, and its momentum has carried into the new year.

On Thursday afternoon, Alphabet’s stock rose another 1%, putting it on the verge of joining an elite group of companies—Nvidia, Apple, and Microsoft—that have reached a $4 trillion market capitalization. While Nvidia remains above this mark, Apple and Microsoft have since dipped below it.

Wednesday marked a milestone for Alphabet as it overtook Apple in market value for the first time since 2019, making it the second most valuable company in the United States.

Why This Is Significant

Alphabet’s impressive stock gains in 2025 were driven by renewed confidence in its artificial intelligence capabilities and the continued strength of its core search and advertising operations. Now, as the world’s second most valuable company, Alphabet’s performance is poised to have a major influence on broader markets in 2026.

What’s Fueling Investor Confidence?

Alphabet’s shares surged 65% in 2025, outperforming all other Magnificent Seven stocks. The launch of the Gemini 3 AI model in November impressed both investors and industry leaders. Salesforce CEO Marc Benioff even stated he would no longer use ChatGPT, the AI chatbot that gained popularity in late 2022. The excitement around Gemini 3 reportedly led OpenAI, the Microsoft-backed company behind ChatGPT, to issue a “code red” to accelerate improvements to their own AI.

Investors were also encouraged by the fact that Gemini 3 was trained using custom chips developed internally. The positive reception of Gemini 3 has allowed Alphabet to promote its tensor processing units, created in partnership with Broadcom (AVGO), as a viable alternative to Nvidia’s dominant AI chips.

Alphabet’s advertising division, responsible for nearly 75% of its revenue, also contributed to the company’s strong performance last year. In 2024, a federal judge ruled that Google had maintained an illegal search monopoly, raising concerns that the company might be forced to divest key assets like Chrome or Android. However, the court’s final decision was far less disruptive than anticipated, alleviating investor concerns that had lingered throughout the first half of the year.

At the same time, Google demonstrated to investors that artificial intelligence was not the existential threat to its search engine that some had predicted. The introduction of AI-powered search features actually boosted user engagement and revenue growth, according to company executives.

Looking Ahead: What’s Next for Alphabet?

Alphabet faces new challenges in the coming year as it strives to maintain its leadership in the AI sector. One of the most anticipated trends on Wall Street is the rise of agentic AI—systems capable of performing tasks for users, such as booking travel or making reservations. Investors will be watching to see if Alphabet can deliver on these expectations.

Autonomous vehicles are also in focus, with both Tesla (TSLA) and Alphabet’s Waymo expected to expand their operations significantly. Alphabet is planning to introduce public rides in its new "Ojai" robotaxi later this year.

Analysts remain optimistic about Alphabet’s prospects, though they caution that further gains may be modest after last year’s rally. Of the 15 Wall Street analysts tracked by Visible Alpha, 12 currently rate the stock as a "Buy," while the rest are neutral. The consensus price target of approximately $332 is only about 2% above Thursday’s intraday price.