(April 27): Alphabet Inc. closed on Friday with a market capitalization above US$2 trillion (RM9.54 trillion) for the first time. This comes as a strong earnings report reassured investors that Google's parent company will become a major player in artificial intelligence (AI). ).
Shares rose 10% to $171.95, the biggest single-day gain since July 2015, giving the company a valuation of $2.15 trillion. The prepayment added about $200 billion to the company's market capitalization, making it one of the largest single-day value additions in stock market history. The stock has risen 23% this year, compared with a 5.3% gain for the Nasdaq 100 index.
The US$2 trillion milestone came on the heels of the company's results showing better-than-expected revenue due to strong performance in its cloud computing division. Growth in AI is accelerating demand for cloud, while Alphabet also encouraged investors by introducing a dividend and announcing a $70 billion stock buyback program.
“Alphabet is so well run, its free cash flow is absolutely amazing, and it has such a huge R&D budget that it's anyone's guess which company will have the best AI products. But it's hard to bet on this,” he said. Wayne Kaufman, chief market analyst at Phoenix Financial Services.
The stock has topped the US$2 trillion mark on an intraday basis in 2021 and earlier this month, but this is the first time Alphabet has closed above it. In doing so, this company enters rare territory. Only Apple Inc, Microsoft Corp, Saudi Aramco, and Nvidia Corp exceeded this threshold. Driven by huge demand for AI chips, Nvidia surpassed US$2 trillion earlier this year, but Amazon.com itself is not far behind.
The road to US$2 trillion was somewhat bumpy. The stock price has been volatile amid some high-profile criticism of the company's AI products, and before the latest report was released, some investors had been investing heavily in the space for years. Despite this, many had doubts about the company's ability to compete with companies like OpenAI in this important space.
Wall Street continues to have a generally positive view on the stock, as nearly 85% of analysts have research on the stock. bloomberg Recommended purchase. Both revenue and sales are expected to grow at double-digit rates annually through 2026.
Furthermore, stock prices continue to appear undervalued. The stock is trading at approximately 23.5 times its estimated PER, making it one of the cheapest of the so-called Magnificent Seven. The stock trades at a discount to the Nasdaq 100 and only slightly above its 10-year average multiple.
