Last week saw Alphabet – Google’s parent company – hitting a $2 trillion valuation. This marks just the third time that a US firm has reached this figure. With both Microsoft and Apple leading the way, it shows that Alphabet is now one of the true heavy-hitters of the Big Tech domain.
Alphabet has enjoyed an excellent 2021 and was actually the best-performing of the five biggest tech stocks . Each quarterly report showed that Alphabet had cleverly benefited from the relative return to normality after the pandemic. With a shrewd positioning in advertising-based revenues along with innovation in cloud computing, it has helped Alphabet stock prices nearly hit a record $3,000 mark.
While the $2 trillion valuation is just a number, it shows that Alphabet is part of the tech elite and many expect that Alphabet stock will continue to rise as a result of its relatively cheap valuation and growth rate. Not bad for a tech company that was worth just $23 billion when Google had its IPO in 2004.
A great year for Alphabet
With a stock value rise of 70%, Alphabet has been the darling of Wall Street in 2021. Much of this has been due to things like the fact that Alphabet-owned YouTube has brought in over $7 billion in advertising revenues in the third-quarter.
Not only was this an increase of over 43% compared to 2020, but it was more than the pooled revenues of Twitter, LinkedIn, Pinterest and Snapchat. Interestingly, ad revenues in the third quarter were largely unchanged despite Apple’s privacy changes that had hit Facebook hard.
But it’s the sheer reach of Alphabet that truly impresses. From dominating internet searches to pioneering cloud computing software, the company has largely sidestepped the supply chain issues that have dogged tech rivals like Apple. Plus with the Waymo electric car company making positive noises, there is real hope that these are still early days for the rampant rise of Alphabet.
Who will be the first $3 trillion company?
Given the explosive growth of Alphabet, it’s little wonder that there is already speculation about which will be the first company to hit the $3 trillion mark. Unsurprisingly, Microsoft, Apple and now Alphabet are among the front-runners, while both Tesla and Amazon are in with a shot.
The recently rebranded Facebook as Meta Platforms is expected to join the trillion-dollar club soon as it has a market valuation of approximately $930 billion. Plus Tencent and Nvidia are also hovering around the trillion-dollar mark.
All of which has led to the bizarre situation where the five-largest tech brands make up around a quarter of the overall market cap of the S&P 500. But which of these brands will continue their impressive growth rates remains to be seen. After all, Cisco and Intel led the tech world a couple of decades ago, but have since lost ground to the new generation of tech brands.