Key Points
- Alphabet surpassed Apple on Wednesday, becoming the second-most valuable company in the U.S., and continued to see its stock increase on Thursday, nearly reaching a market cap of $4 trillion.
- The stock surged 65% in 2025, thanks to the success of its Gemini 3 AI model, advancements in custom AI chips, and a robust advertising business.
Google’s parent company, Alphabet, is clearly on a roll, particularly throughout 2025.
On Thursday afternoon, Alphabet’s stock rose roughly 1%, bringing it close to becoming the fourth company ever to attain a $4 trillion market cap. Only Nvidia, Apple, and Microsoft have achieved this milestone before, and notably, Apple and Microsoft are currently below that mark.
This week, Alphabet became the second most valuable company in the U.S., marking the first time it has eclipsed Apple in market capitalization since 2019.
Why This Matters
The impressive rise of Alphabet’s stock reflects growing confidence in its AI innovations and core search and advertising ventures. Now positioned as the world’s second-largest company, Alphabet’s stock might heavily influence the market’s movements in 2026.
What’s Driving Investor Confidence?
Alphabet kicked off the year strongly, with a remarkable 65% increase in stock value throughout 2025, making it the standout performer among the so-called Magnificent Seven stocks. There was notable excitement around the new AI model, Gemini 3, released in November. In fact, Salesforce CEO Marc Benioff expressed that he would “never go back” to using ChatGPT since he was so impressed with Gemini 3. This environment has even pushed OpenAI, the parent company of ChatGPT, to hasten upgrades to its platform.
Investors were especially pleased that Gemini 3 was developed using a proprietary chip created in-house. The positive feedback helped Alphabet market its custom tensor processing units, which were built in cooperation with Broadcom, as a viable alternative to Nvidia’s leading GPUs in the AI chip sector.
Last year, Alphabet’s stock also benefited from its strong advertising revenue, which makes up nearly 75% of its total income. Although there were concerns in 2024 after a ruling labeled Google as running an illegal search monopoly, the actual impact was less detrimental than many anticipated. The uncertainties surrounding this issue eased just before entering 2025, buoying investor sentiment.
Meanwhile, Google demonstrated that AI wouldn’t threaten its search engine as many had assumed. The introduction of an AI search feature actually enhanced user engagement and increased revenue streams, according to company executives.
What’s Next for Alphabet?
Looking ahead, Alphabet faces new challenges as it aims to maintain its lead in the AI space. The rise of Agenttic AI, which allows semi-autonomous operations on behalf of users, is expected to be a hot topic among investors this year. There’s eagerness for Alphabet to release AI systems capable of performing practical tasks, such as booking flights.
Investor interest is also turning to self-driving cars, with companies like Tesla and Alphabet’s Waymo likely to expand their operations significantly this year. Furthermore, Alphabet is anticipated to start offering public rides in its new Ojai robot taxi service soon.
Analysts have a generally optimistic view of Alphabet’s stock for this year, though potential gains may be capped after the impressive rise in 2025. Currently, 12 out of 15 Wall Street analysts rate the stock as a “buy,” while the remainder is neutral. The average price target stands at around $332, just slightly above the stock’s price earlier on Thursday.
