• Alphabet is nearing a $4 trillion market cap after Google’s AI-driven surge, strong cloud revenue and optimism on the Gemini 3 model. 
  • Google’s push for AI is building faster AI models and cheaper chips, which aims to challenge Nvidia, Microsoft and OpenAI. 
  • Big Tech’s AI spending race intensifies, with Alphabet planning up to $93B in 2025 CAPEX, maintaining low debt, and strengthening its influence despite rising concerns of overheated valuations. 

In a brutal month for tech stocks, especially those closely associated with the artificial-intelligence race, the internet-search giant Google has solidly changed the trend.  

This sets the stage for Alphabet’s standout performance, renewed AI momentum, and rising influence across the tech landscape. 

Reversal in AI Sentiment 

Alphabet closed in on a $4 trillion valuation this week, set to become only the fourth company to enter the exclusive club, as the Google parent rides an artificial intelligence-driven rally. Google shares have risen 70% YTD, outperforming AI rivals Microsoft and Amazon. ⁽¹⁾  

Alphabet regained momentum by turning its cloud segment into a major growth driver, which led to a major investment by Berkshire Hathaway and has been earning strong early reviews from its Gemini 3 model. ⁽²⁾  

Tech stocks have pushed markets to new record highs as investors continue to bet on AI-driven profits, leaving valuations increasingly dependent on rapid earnings growth. 

However, the milestone might raise worries again that soaring valuations are drifting away from business fundamentals, raising fears of a bubble like the dot-com era of the 1990s.  

A series of deals involving OpenAI and Nvidia, two central players in the AI boom, has further fueled those concerns. ⁽³⁾  

How Alphabet’s AI Progress Is Shaping Its Competitors 

Google remains heavily invested in advanced AI models and has spent huge amounts of capital to stay ahead in the competition. Even though most of its $385 billion in yearly revenue still comes from advertising, it continues to push its own AI technology.  

Google’s new AI model Gemini 3 is built and trained by using its own networks and its own custom-designed TPU chips (Tensor Processing Unit). ⁽⁴⁾  

Nvidia, Oracle, Microsoft and other tech giants that have profited from OpenAI’s huge investment may face challenges as a result of Google’s progress with advanced AI models and its increasing use of in-house chips.  

Google’s greatest advantage is its dominance in search, where its artificial intelligence still powers about 90% of all internet queries worldwide. ⁽⁵⁾  

Analysts remain optimistic on Google’s position in the AI race due to its strong cash flow and strong internet business. Gemini 3 is reported to be faster, sharper and perform more in-depth research than OpenAI’s ChatGPT and Elon Musk’s Grok. 

Big Tech Spending Race and Alphabet’s Capital Strategy 

During the launch of ChatGPT, it has dominated the AI industry and has triggered a spending race among all big tech companies, who are all seeking to create their own generative AI.  

Alphabet, Microsoft, Amazon, Meta and Oracle have contributed $321 billion in capital spending from January to September this year. ⁽⁶⁾  

Google isn’t going anywhere and is willing to dominate the spending race. The company said that its CAPEX will be between $91 billion and $93 billion in 2025. Despite a recent $25 billion bond sale, Alphabet carries a much lower relative debt load than its big tech peers. ⁽⁷⁾  

Demand for Google Chips 

Meta is considering using Google’s tensor processing units (TPUs) in its data centers starting in 2027 and may even rent TPUs from Google Cloud as early as next year. ⁽⁸⁾  

If Meta adopts Google’s chips, it would represent a major win for Google and a strong validation of its technology. The announcement caused Nvidia’s stock to drop as Meta considered moving away from their chips. ⁽⁹⁾ 

Looking Ahead 

Alphabet’s strong performance, aggressive capital strategy and its fast AI innovation have established its position as one of the strongest players in the next phase of the AI race.  

Despite rising worries about stretched valuations, Google’s strength in search and AI chips continues to put competitors on the defensive. Now on the brink of a $4 trillion valuation, Google’s influence across the sector doesn’t seem to be slowing down. 

Sources: ⁽¹⁾ ⁽²⁾ ⁽³⁾ Reuters, ⁽⁴⁾ ⁽⁵⁾ ⁽⁶⁾ ⁽⁷⁾ Wall Street Journal, ⁽⁸⁾ ⁽⁹⁾ CNBC