Google joins $2 trillion club: Becomes 'richer' by $200 billion in one single day

Alphabet Inc, the parent company of Google , has finally crossed a major milestone by definitively closing above a $2 trillion market capitalization for the first time on Friday-- April 26. According to a report in Bloomberg, this achievement comes on the heels of a powerful earnings report that reassured investors about Alphabet's position as a dominant player in the field of Artificial Intelligence (AI).

The stock price surged 10% to $171.95, marking its biggest single-day jump since July 2015. This significant rise translated to a valuation of $2.15 trillion, adding a staggering $200 billion to the company's market cap in a single day – one of the largest single-day value increases in stock market history. Notably, Alphabet's shares have climbed 23% so far this year, significantly outperforming the Nasdaq 100 Index's gain of just 5.3%.

What's behind $200 billion addition in one day

This historic milestone follows the company's impressive earnings report, where revenue surpassed expectations driven by the strength of its cloud computing unit. The surge in cloud demand is attributed to the growth in AI. Adding to investor delight, Alphabet announced the introduction of a dividend and a $70 billion stock buyback program.

"Alphabet is exceptionally well-managed," commented Wayne Kaufman, chief market analyst at Phoenix Financial Services, to Bloomberg. "They boast an astonishing amount of free cash flow and a massive R&D budget. While it's impossible to predict which company will ultimately produce the best AI products, Alphabet is a formidable force in the race," he added.

Why Google entering $2 trillion club is different this time
While Alphabet previously touched the $2 trillion mark intraday in 2021 and again earlier this month, this is the first time the company has closed above it. This achievement places them in a highly exclusive group alongside Apple, Microsoft, Saudi Aramco, and Nvidia – all companies that have surpassed the $2 trillion threshold. Notably, Nvidia, fueled by the massive demand for its AI chips, also achieved this feat earlier this year. Amazon, another tech giant, sits close behind, nearing the $2 trillion mark itself.

The path to this milestone wasn't entirely smooth. Alphabet's stock has experienced volatility due to high-profile criticism surrounding their AI offerings. Prior to the latest report, some investors expressed doubts about the company's ability to compete with rivals like OpenAI, despite significant investments in the field over the years.

However, Wall Street analysts remain largely positive on the stock. Nearly 85% of analysts tracked by Bloomberg recommend buying Alphabet shares. Both earnings and revenue are forecasted to grow at a double-digit pace annually through 2026. Adding to the appeal, the stock appears to be a relative bargain. Trading at around 23.5 times estimated earnings, it's one of the most affordable options among the so-called "Magnificent Seven" tech giants. Additionally, it trades at a discount to the Nasdaq 100 and only slightly above its 10-year average multiple.