Google market value passes $2tn mark on back of share rally 

Google's cloud platform is on a 'march toward profitability'. File Picture.

Google parent Alphabet saw its shares rally to breach $2trn (€1.72trn) in market value for the first time, fuelled by a rebound in spending on digital ads and growth in its cloud business.

Its Class A shares gained as much as 1.2% to a record high, with the stock extending a recent rally to a fifth session. Alphabet is the top performer among the five biggest US tech stocks this year, with a more than 70% advance, fuelled largely by the growth in Google’s advertising business.

The share-price advance puts the company in an exclusive club alongside Apple and Microsoft, the latter of which also reached the $2trn milestone this year. The Google parent hit $1trn in value for the first time in January 2020.

“It’s just a number, but I think it demonstrates that these are leading companies,” Kim Forrest, founder and chief investment officer at Bokeh Capital Partners, said.

It really is that simple — that the market rewards their growth, and their prospects for growth, with big valuations.”

Alphabet trades around 24 times forward earnings, making it cheaper than Amazon.com and Microsoft, but more expensive than Facebook parent Meta Platforms.

RBC Capital Markets analyst Brad Erickson said arguments can be made around whether the stock’s multiple is already baking in enough optimism, though he remains positive on Alphabet, adding that it is “crowded for a reason”.

Given the especially attractive Covid rebound exposure, ever-rising YouTube engagement and monetisation, and Google Cloud Platform’s march toward profitability, we see solid reasons to own the name,” he said.

Alphabet reported third-quarter sales last month that beat analysts’ estimates, reflecting robust advertiser spending.

-Bloomberg