Google’s corporate parent joins $4 trillion club as investors continue to bet on AI breakthroughs

Google parent Alphabet Inc. on Monday became the fourth major tech power valued at $4 trillion, a once-seemingly unfathomable milestone that feels more like a rite of passage amid an artificial intelligence arms race.

Alphabet reached that threshold just four months after Google dodged the U.S. government’s attempt to break up its Internet empire following a ruling last year that called its ubiquitous search engine an illegal monopoly.

In an effort to prevent further abuses, a federal judge overseeing the case ordered a shakeup that investors widely interpreted as a slap on the wrist, leading to a 57% increase in Alphabet’s stock price since then, generating an additional $1.4 trillion in wealth for shareholders.

The rapid rise propelled Alphabet into a $4 trillion club that previously welcomed computer chipmaker Nvidia, which became the first to break the barrier in July. Apple and Microsoft also surpassed $4 trillion in market value last year, but pulled back amid concerns that the AI ​​spending spree could turn into a bursting bubble.

Nvidia’s market value briefly topped $5 trillion in late October, before reversing course as AI bubble fears also weighed on its stock price because its chipsets are necessary for the technology to work.

Meanwhile, Amazon is currently valued at $2.6 trillion, in part because of its AI ambitions, and Meta Platforms, Facebook’s parent company, is valued at $1.6 trillion for some of the same reasons. Electric automaker Tesla is also betting big on AI, a bet that prompted the company — now valued at $1.5 trillion — to approve a compensation package that would pay CEO Elon Musk $1 trillion if several goals are met, including reaching a market value of more than $8.5 trillion.

Alphabet joined the $4 trillion club the same day Apple announced it would rely on Google’s artificial intelligence technology to help improve its virtual assistant Siri, after failing in its own efforts to bring more advanced features to the iPhone.

Google is well-positioned to become one of the big winners in the AI ​​battle as it deploys the technology to transform its search engine into a more conversational response engine to rival ChatGPT and OpenAI’s Perplexity.

The next generation of the Gemini model that underpins Google’s AI technology has received rave reviews since its recent release, helping to drive Alphabet’s stock price higher while shares of other AI-focused companies have fallen amid lingering bubble concerns. Google’s cloud division, which sells AI tools to businesses and government agencies, has become Alphabet’s fastest-growing segment over the past three years, while AI technology has enabled its Waymo robotaxi division to send more self-driving vehicles into cities across the United States.

Competitive threats posed by rising AI stars like OpenAI and Perplexity are one reason why U.S. District Judge Amit Mehta rejected the U.S. Justice Department’s proposal to force Google to sell its industry-leading Chrome web browser. The judge reasoned that technological advancements triggered by AI have already led to significant changes in online search.

Alphabet’s market value could fall if investor sentiment about the company’s exposure to a potential AI bubble suddenly changes. Even Alphabet CEO Sundar Pichai acknowledged that some market “irrationality” is contributing to the skyrocketing market values ​​of big tech companies in an interview with the BBC in November.

“I think no company will be safe, including us,” Pichai said if the euphoria caused by AI suddenly evaporates.