Alphabet races toward $4 trillion valuation as AI-fueled gains accelerate

By Zaheer Kachwala and Aditya Soni

(Reuters) -Alphabet closed in on a $4 trillion valuation on Monday, set to become only the fourth company to enter the exclusive club, as the Google parent rides an artificial intelligence-driven rally.

Shares of the company rose more than 5% to hit a record high of $315.9, giving it a market capitalization of $3.82 trillion. The stock has climbed nearly 70% so far this year, far outperforming AI rivals Microsoft and Amazon.com.

Nvidia, Microsoft and Apple have previously hit a $4 trillion valuation. Only Nvidia and Apple remain on the list.

The surge reflects a striking reversal in sentiment toward Alphabet after some investors feared the company had lost its AI edge to OpenAI after the 2022 launch of ChatGPT, even though it invented much of the underlying technology behind generative AI.

Alphabet has regained momentum this year by turning its cloud business, once an also-ran, into a key growth driver, drawing in Warren Buffett's Berkshire Hathaway as an investor and winning strong early reviews for its new Gemini 3 model.

Steve Sosnick, chief market analyst at Interactive Brokers, said Berkshire's stake has been a key draw for investors.

"Even though it's doubtful Warren Buffett had any role in this purchase ... the market is still in the mindset of anything Berkshire does is worth emulating and to be fair, that's worked for a long time," Sosnick said.

Google shares have also rallied as Big Tech emerged in recent months largely unscathed from the bipartisan antitrust push that began in U.S. President Donald Trump's first term.

The company sidestepped a forced sale of its Chrome browser after a court found its search business to be an illegal monopoly but stopped short of ordering a breakup.

Still, the milestone may fan fears about surging valuations that some business leaders warn have detached market movements from business fundamentals, sparking worries of a bubble reminiscent of the dot-com boom of the 1990s.

A wave of circular deals involving OpenAI and Nvidia - two of the companies at the heart of the AI boom - have also amplified the fears.

Still, analysts said Google is well-positioned in the AI race, thanks to its strong cash flow, in-house chips that serve as an alternative to Nvidia's pricey processors and a sprawling internet search business that is already benefiting from AI integration.

(Reporting by Zaheer Kachwala and Aditya Soni in Bengaluru, additional reporting by Johann Cherian; Editing by Sriraj Kalluvila)