Alphabet’s rise to $4 trillion cements status as AI trade winner

Core Insights - Alphabet Inc. has surpassed a $4 trillion market capitalization, becoming one of the few companies to achieve this milestone, driven by investor confidence in its position within the artificial intelligence sector [1][7] Company Performance - Shares of Alphabet closed up 1% at $331.86, resulting in a market cap of just over $4 trillion, overtaking Apple Inc. to become the second-largest firm behind Nvidia Corp. [2] - Alphabet's stock has increased by 6% in 2025, building on a previous year's rally of over 65%, adding nearly $1.5 trillion to its market valuation [3] AI Dominance - The positive sentiment towards Alphabet is attributed to its strong position in key AI areas, with favorable reviews for its Gemini AI model alleviating competition concerns from firms like OpenAI [4][7] - The company's tensor processing unit chips are anticipated to be a significant driver of future revenue growth [4] Competitive Advantages - Analysts note that Alphabet's competitive advantages in AI are not only intact but are also expanding, with no other competitor possessing the same combination of models, compute power, applications, talent, and data [5] - Alphabet's shares are trading at approximately 28 times estimated earnings, which is near their highest since 2021 and significantly above the 10-year average of 20.5 [5] Market Validation - Despite its increased valuation, Alphabet trades at a slight discount compared to the overall Magnificent Seven Index [6] - Warren Buffett's Berkshire Hathaway disclosed a stake in Alphabet, indicating confidence from a traditionally conservative investor regarding tech stocks [6]