Alphabet Hits $1 Trillion Market Cap, Boosts Big Tech Worth To $5.2 Trillion

Alphabet, Inc. on Thursday became only the world's sixth firm to hit a market capitalization of $1 trillion. It's the fourth U.S. firm to do so after Apple, Inc. (August 2018), Microsoft Corporation (June 2019) and Amazon.com (September 2019).

The only other trillion dollar firms thus far are Saudi Aramco or the Saudi Arabian Oil Company (December 2019) and Chinese state-owned oil and gas firm, PetroChina Company Ltd (November 2007). Saudi Aramco is also the only firm to hit a market cap of $2 trillion.

Alphabet's stock closed Thursday on the NASDAQ Composite at $1,450.16, up 0.76 percent, giving it a market cap of $1.00 trillion. It opened at $1,445.45 and hit a high of $1,450.70. Alphabet's shares have risen nearly 17 percent over the last three months, outpacing a broader rally in the S&P 500 index over the same period by six percent.

These glad tidings for Alphabet also mean the five most valuable U.S. tech firms -- Alphabet, Amazon, Apple, Facebook and Microsoft -- now account for over 17 percent of the S&P 500, up from 11 percent in 2015, according to FactSet. These five giants together are worth a massive $5.2 trillion. Two-thirds of the jump in value, or $3.5 trillion, occurred since 2015.

Analysts claim that Alphabet, the parent firm of search engine giant Google, Inc., remains one of the best investment opportunities on Wall Street. Some note Alphabet's stock is surprisingly undervalued, boosting its potential as a profitable investment. Alphabet's stock has risen 51 percent since May 2017 and has outperformed the S&P 500 (up 37 percent) in that time frame, according to Michael De Oliveira at financial commentary and analysis firm, Seeking Alpha.

Short interest in the Alphabet's stock stands at 1 percent, which is close to a 52-week high for the stock. It's also higher than Microsoft and Facebook, according to Refinitv data. Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out. It's an indicator of how many investors are betting on a price decline.

Ads are still expected to fuel Alphabet's future growth because it still accounts for almost all of Alphabet’s revenue. On the other hand, Alphabet generated over $8 billion in revenue from its cloud service, placing it third behind Amazon and Microsoft. Google Cloud has been expanding its operations through mergers and acquisitions. Among its more significant M&As was the $2.6 billion purchase of data analytics company Looker in 2019.