News: Google parent Alphabet rejoins the $1.5 trillion valuation club for the first time in a year as AI efforts spur rally

Google's parent company, Alphabet, achieved a market capitalization of $1.5 trillion on Tuesday, marking its return to an exclusive group following a strong rally driven by AI-related advancements.

The company's shares surged nearly 3% and closed just below $120, pushing Alphabet's overall valuation to $1.521 trillion. This is the first time since May 2022 that Alphabet has reached such a high valuation, as reported by CompaniesMarketCap.

After experiencing a challenging 2022 that resulted in a significant decline of approximately 40% in its total value, Alphabet has rebounded impressively in 2023, with its stock rallying by 35% so far.

One significant factor contributing to this rally was the introduction of Alphabet's artificial intelligence tool, Bard, on February 8. Despite a setback caused by a chatbot's error in a promotional video, which led to a market capitalization loss of $100 billion in a single day, the stock has continued to perform well.

The technology sector as a whole has enjoyed a strong start to 2023, with the emergence of ChatGPT driving investor interest in AI-related stocks. The Nasdaq Composite index, which includes many of these companies, has risen by 18% year-to-date.

Furthermore, the sector has benefited from the expectation that the Federal Reserve will soon pause its efforts to combat inflation. The stabilization of interest rates allows high-growth companies to borrow money at fixed rates, which, in turn, enhances their future cash flows, a key component of their valuations.

In terms of market capitalization, Alphabet joins Apple and Microsoft as the only three US-listed companies currently valued at $1.5 trillion. Amazon remains the sole company with a market capitalization exceeding $1 trillion, according to data from CompaniesMarketCap.