Alphabet is Wall Street's AI darling
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Alphabet's market cap hit $4 trillion, making it the second-most-valuable company in the world, right behind chip giant Nvidia.
Why it matters: The market is voting on the AI winners and losers constantly. Alphabet is king. For now.
What they're saying: "Gemini is the GOAT here," Sarah Kunst, an angel fund investor, tells Axios.
- If you look at Alphabet as Tesla (robotics, AI self-driving cars) meets OpenAI, on top of their core businesses, it's "way undervalued," she adds.
State of play: Alphabet and Nvidia are the only two members of the so-called Magnificent 7 basket of Big Tech stocks that beat the S&P 500 in 2025.
- Alphabet was considered behind on the AI race until this fall.
- That's when investors started caring about fiscal responsibility: Alphabet spends the lowest proportion of its revenue on AI capex among the hyperscalers.
- Alphabet's AI model, Gemini, is also getting serious street cred: Apple confirmed on Monday that it would use Gemini to run its AI-powered Siri.
- Walmart, meanwhile, is using it as part of an AI-powered shopping effort.
Between the lines: Companies want to give Alphabet, not OpenAI money in exchange for the use of its AI.
Yes, but: A price to earnings ratio of 32 isn't exactly screaming more room to run for Alphabet.
- But growth investors would caution that valuations are always elevated for tech winners.
- If you paid attention only to valuations, you would have missed out on all the major Big Tech stocks that now define our market.
The bottom line: The AI winners and losers are still being defined, especially for those who believe we are in the first inning of this technological revolution.
- But for now, Wall Street has a front-runner.
