Alphabet Inc, Google's parent company, is inching closer to becoming a $2 trillion company. Alphabet's stock surged by more than 8% on Wednesday following the release of its better-than-expected earnings report, raising its market valuation to $1.97 trillion.
At the peak of the stock's surge during the start of trading Wednesday, Alphabet's market valuation briefly went above $2 trillion. This already includes the value of Class B shares, which are now on the stock market. The stock eventually corrected and closed at around $2,975 per share. If the stock closes above the needed value to get it past $2 trillion, the company will join its peers - Microsoft and Apple - in the ultra-elite club.
AJ Bell analysts said the surge in Alphabet's stock is a good sign as it eases the concerns surrounding Big Tech. Analysts said 2022 began with a lot of investor concerns over the future of big tech, with some asking whether it would lead to another dot-com crash. However, Alphabet's performance only went to show that high-quality tech companies can still deliver.
Even as authorities across the world probe continue to probe large tech companies over charges of privacy breaches and antitrust issues, shares of Wall Street's most valuable tech businesses have surged in the last two years. The surge was mainly attributed to the increase in online and technology use because of the pandemic-driven transformations in how people work and learn.
At least 20 brokerages upped their price estimates on Alphabet shares after the company reported record quarterly sales that exceeded forecasts. The median analyst price target is now $3,450 per share, up 16% from where it is today.
For its latest quarter, Alphabet earned $30.69 per share, slightly higher than the $27.34 per share projected by analysts. It also outperformed analysts' estimates of $72.17 billion in sales, coming in at $75.33 billion.
The search engine behemoth is primarily reliant on Google's ad income, which increased in the third quarter. The segment's revenue totaled $61.24 billion, up 33% from $46.2 billion the previous year.
The company's cloud division saw a 45% increase in sales to $5.54 billion. During its earnings call, Alphabet CEO Sundar Pichai said the company experienced a 65% year-over-year increase in the number of cloud transactions worth more than $1 billion.
During its earnings call, Alphabet announced a 20-to-1 stock split, giving stockholders 19 shares for every share they own. Companies split stocks in order to entice investors by making them more inexpensive. Some brokerages, such as Robinhood Markets, enable investors to acquire fractional shares, making the strategy less effective in today's market.
