Technology and AI-linked stocks have powered Wall Street’s main indexes to record highs lately amid growing hopes that the US Federal Reserve will cut interest rates later this week
[BENGALURU] Google parent Alphabet hit a market capitalisation of US$3 trillion for the first time on Monday (Sep 15), riding on renewed optimism around artificial intelligence (AI) and a favourable antitrust ruling.
Class A shares of the company were up 3.8 per cent at US$250, while Class C shares climbed 3.7 per cent to US$250.4, both trading at record highs.
Including Monday’s gains, the company’s shares have rallied more than 32 per cent so far this year, the best performer among the so-called “Magnificent 7” stocks and outpacing the 12.5 per cent gain for the S&P 500.
Alphabet joined other tech giants Apple and Microsoft in hitting a US$3 trillion valuation, while AI chipmaker Nvidia, the world’s most valuable company, boasts a market cap of US$4.3 trillion.
Technology and AI-linked stocks have powered Wall Street’s main indexes to record highs lately amid growing hopes that the US Federal Reserve will cut interest rates later this week.
Oracle’s blowout forecast last week was the latest to fire up the AI trade.
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Kim Forrest, chief investment officer at Bokeh Capital Partners, said that tech stocks have been the leaders of the recent rally and “there has been no other (sector) in the past 18 months, maybe even two years that has had such excitement from investors”.
The communications services sub-sector, which houses Alphabet, has jumped more than 26 per cent so far this year, making it the best performing sector among the 11 major sub-indexes, with information technology in second place.
Holding together
Investor sentiment received a boost after a US court earlier this month allowed Alphabet to retain control of its Chrome browser and Android mobile operating system, marking a pivotal moment for the compan,y whose dominance in search and mobile ecosystems has long drawn scrutiny.
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While sharing data as part of the ruling will strengthen Google’s advertising business rivals, not having to divest Chrome or Android removes a major concern for investors who view them as key pieces to Google’s overall business.
In July, the company’s cloud-computing unit delivered an almost 32 per cent jump in second quarter revenue, surpassing expectations as investments in in-house chips and the Gemini AI model began to pay off.
“They still are very dependent on search, but with YouTube, Waymo, and other capabilities and products they are working on, investors are starting to see that possibility that this isn’t just a search company anymore, this is a company that’s moving into a lot of other things,” said Dennis Dick, chief strategist at Stock Trader Network.
Alphabet trades at around 23 times its forward earnings, the lowest among the “Magnificent 7”, compared to its five-year average of 22, according to data compiled by LSEG. REUTERS
