Google's parent company, Alphabet, has achieved a monumental financial milestone, surging past a $4 trillion valuation for the first time and eclipsing Apple to become the world's second-most valuable corporation.
The AI Deal That Propelled Alphabet
The dramatic spike in Alphabet's share price, which occurred on Monday, was triggered by a landmark announcement from Apple. The iPhone maker revealed it had selected Google's Gemini AI model to power a significant overhaul of its digital assistant, Siri, which is installed on every iPhone. While the financial terms of the agreement remain undisclosed, the market's reaction was immediate and powerful.
In a statement to CNBC, Apple explained its decision, saying, "After careful evaluation, we determined that Google's technology provides the most capable foundation for Apple Foundation Models." This partnership represents a major coup for Alphabet's artificial intelligence division, solidifying Gemini's position in the competitive AI landscape.
Alphabet's Remarkable Turnaround and Growth Engines
This valuation milestone signals a profound shift in investor confidence towards Alphabet. The company's stock has soared approximately 65% in 2025, outperforming its peers in Wall Street's elite "Magnificent Seven" group. This surge has allayed previous doubts about Alphabet's AI strategy, bolstered by successful product launches like the latest Gemini model and the popular Nano Banana image tool.
Meanwhile, its rival OpenAI failed to impress with the release of GPT-5, allowing Alphabet to capitalise. Beyond AI, Alphabet has successfully transformed its once-overlooked Google Cloud unit into a powerhouse. Revenue for the cloud division jumped 34% in the third quarter, with a backlog of sales contracts reaching $155 billion. A key growth driver has been renting out its internally developed AI chips to external customers.
The company's core advertising business, fuelled by Google Search and YouTube, has remained resilient despite economic headwinds and fierce competition.
Regulatory Challenges and Market Context
Alphabet's ascent occurs amidst significant regulatory scrutiny. The tech giant is navigating two major US antitrust suits. In the first, a judge ruled in September against breaking up the company, allowing it to retain control of Chrome and Android. In the second, a judge found Google had illegally monopolised the online ad market in April; a trial to determine remedies began in September and could force a divestment of parts of its ads business.
Alphabet now stands as the fourth company to reach the $4tn mark, following Nvidia—which later hit $5tn—Microsoft, and Apple. While fears of a tech stock bubble persist, Wall Street's fervent appetite for AI investment opportunities continues to drive the market's meteoric rise, with Alphabet firmly at the forefront of this transformative wave.
