Alphabet (GOOG 2.29%)(GOOGL 2.27%) is the parent company of Google, YouTube, Waymo, and more. Its stock has soared by a whopping 48% this year, as artificial intelligence (AI) drives accelerated revenue growth in critical businesses like Google Search and Google Cloud.
Alphabet has a market capitalization of $3.4 trillion as I write this, so its stock only needs to gain a further 18% for the company to achieve a $4 trillion valuation. It would join an exclusive group of just three other companies that have crossed that milestone so far: Nvidia, Microsoft, and Apple, and here's why I think it will get there before any other company.
Image source: Alphabet.
AI is transforming Google Search
When OpenAI's ChatGPT gained momentum at the start of 2023, investors were worried it would steal traffic away from Google Search, because the AI chatbot offered a more convenient way for people to find information online. Since Google Search consistently generates over half of Alphabet's total revenue, that would have been catastrophic for the company.
But almost three years later, Alphabet has successfully pulled Google Search into the modern era with new features like AI Overviews and AI Mode. They are powered by the company's family of large language models (LLMs) called Gemini, which outperform some of the best models in the industry from leading developers like OpenAI and Anthropic.
AI Overviews appear above the traditional Google Search results and combine text, images, and links to third-party sources to provide complete responses to queries. Users can also click a button to enter AI Mode, which opens a chatbot-style interface where they can refine their initial query to get a better response. These features save users from sifting through web pages to locate the information they need, creating a more convenient experience.
AI Overviews are now used by over 2 billion people every single month, and Alphabet says they monetize at approximately the same rate as traditional Google Search advertisements, so they aren't cannibalizing the company's golden goose.
In fact, during the third quarter of 2025 (ended Sept. 30), Google Search generated a record $56.5 billion in revenue. It was a 14.5% increase compared to the year-ago period, marking an acceleration from 11.7% in the second quarter just three months earlier, and from 9.8% in the first quarter.
Google Cloud growth is also accelerating
Google Search is Alphabet's largest business, but Google Cloud consistently generates the fastest growth. It brought in $15.1 billion in revenue during the third quarter, which was up 34% year over year. That growth rate accelerated for the second consecutive quarter.
Businesses use Google Cloud to access digital services, from basic data storage to complex software development tools, but AI is the source of its momentum right now. The platform offers state-of-the-art data center infrastructure powered by graphics processing units (GPUs) from Nvidia, which are the premier chips for AI development. However, Alphabet also designed its own chips called tensor processing units (TPUs), which give developers more optionality compared to other cloud platforms.
In fact, AI startup Anthropic plans to access 1 million of those TPUs. The deal is a huge win for Alphabet because its fierce rival Amazon -- which operates the world's largest cloud platform, Amazon Web Services -- owns around 15% of Anthropic.
Google Cloud could be primed for even faster growth in the future, because it had a record-high order backlog of $155 billion at the end of the third quarter from customers who are waiting for more data centers to come online. That figure surged by 82% year over year, so demand is stacking up faster than Alphabet can fulfill it.
NASDAQ: GOOGL
Key Data Points
Alphabet has a clear path to the $4 trillion club
Alphabet has generated trailing 12-month earnings of $10.14 per share, placing its stock at a price-to-earnings (P/E) ratio of 28. That's a discount to the Nasdaq-100 index, which trades at a P/E ratio of 33.2.
In other words, Alphabet is much cheaper than its big-tech peers, on average. Its stock would have to rise 18.5% to match the P/E ratio of the Nasdaq-100, and that alone would boost the company's market cap to $4 trillion.
According to Yahoo! Finance, Wall Street analysts expect Alphabet's earnings to grow to $10.96 per share in 2026, placing its stock at a forward P/E ratio of just 25.9. Using the same calculation as above, Alphabet stock would have to climb 28.1% to match the P/E ratio of the Nasdaq-100, resulting in a market cap of over $4.3 trillion.
Looking at this a different way, that means Alphabet could join the $4 trillion club next year even if its P/E doesn't quite rise to the level of the Nasdaq. Considering the next-largest publicly traded company in the world (Amazon) has a market cap of just $2.7 trillion as I write this, I think Alphabet is the obvious pick to be the next $4 trillion company.
