Google parent Alphabet races toward $4 trillion market cap

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It’s a good day to be an Google shareholder. Even amid this week's sharp tech rally, the stock is emerging as a Wall Street darling.

As of Tuesday morning, shares of the tech giant are exploding higher, and the reason reaches far beyond the company’s best-known business lines — whether search, ads, or YouTube. This time around, what’s most exciting are Google parent Alphabet’s AI initiatives and products — plus what you might call a rapid shift in investor perception.

Shares in Alphabet were up about 1.3% in Tuesday morning trading, putting the company's market capitalization at about $3.9 trillion. The stock is up almost 70% so far this year.

Meanwhile, Nvidia stock was off more than 5% Tuesday morning, continuing its recent selloff following a report that Meta may use Google's AI chips. Nvidia stock has dropped almost 10% in the last month, though it remains up 25% on the year.

Here's what to know.

Google's historic race to a $4 trillion market cap

Over the past six weeks alone, Alphabet stock has shot up almost 35%, adding about $1 trillion in market value and putting the Google parent on track to cross the $4 trillion threshold for the first time.

Google would be just the second company in U.S. stock market history to hit a $4 trillion market cap, one step behind AI chip powerhouse Nvidia. Nvidia hit a $5 trillion market cap last month before retreating. Nvidia's market cap was all the way back to less than $4.2 trillion on Tuesday morning.

Investors were already warming to Google stock after the disclosure earlier this month that Warren Buffett’s Berkshire Hathaway has quietly built a multibillion-dollar position in Alphabet during the third-quarter — its first-ever stake in the tech giant. For a famously value-seeking shop, that amounts to an endorsement. It signals that Alphabet’s AI strategy is more legit than hype, and that the stock valuation offers room for the sort of significant upside that Buffett’s team looks for.

A possible Meta deal?

Alphabet isn’t just giving Nvidia a run for its market cap position. It’s also now being viewed as the most credible challenger to Nvidia in the fast-growing market for AI accelerators.

Most notably, Alphabet’s new Gemini model — its largest and most-sophisticated AI system yet — is being received with unusually positive early reports. Investors, until recent weeks, had worried Alphabet might be falling behind with its AI models. But instead, the launch has reframed the company as a forward-looking heavyweight in what is arguably the entire tech sector’s most competitive space.

Also powering the historic run are reports that Meta may be in talks to buy Google-designed AI chips. Meta is one of the largest AI spenders in the world — so much so that its capital expenditures have recently spooked investors. Any shift of its budget away from Nvidia could have tremendous, highly valuable implications. Even if a deal never maweterializes, the fact that Alphabet is in the conversation signals how far its in-house offerings have come.

All in all, Alphabet sat just about $300 billion south of Nvidia’s market cap on Tuesday. That gap once looked unbridgeable. After the past month, it suddenly looks like the next big tech race.

15,000% returns since the 2004 IPO

Alphabet went public in August 2004 at $2.13 a share, split-adjusted. Since the IPO, the stock has returned approximately about 15,000%. In practical terms, that means that every dollar invested in Alphabet’s IPO would now be worth around $150.