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Alphabet, the parent company of Google, reached its highest share price ever on Tuesday, riding the wave of artificial intelligence to a historic valuation. The stock hit an intraday high of $159.89 per share and closed at $158.14, pushing the company’s market value to $1.95 trillion, just 3% shy of the coveted $2 trillion mark. This milestone has only been achieved by a few other tech giants such as Apple, Microsoft, and Nvidia, as well as Saudi Aramco.

The recent surge in Alphabet’s stock price can be attributed to a 13% increase year-to-date and a 77% jump since the end of 2022. This rally has been driven by record profits from advertising spending and investor optimism surrounding the company’s potential to profit from AI. Analysts are optimistic about Alphabet’s future growth potential, with the average price target implying a $2.1 trillion market cap. Wall Street largely expects the company to surpass the $2 trillion mark.

Despite Alphabet’s impressive performance, it still falls short of its peers in terms of annualized returns on investment. Google shares have seen a 19% annualized return over the last decade, outperforming the S&P 500 but trailing behind other trillion-dollar companies like Amazon, Apple, Microsoft, Meta, and Nvidia, which have achieved over 20% annualized returns.

Alphabet’s AI offerings have faced mixed reactions from the market in the past, but sentiment has improved as Google establishes itself as a key player in generative AI. Reports suggest that the company is considering charging for AI-powered search, which could further boost its revenue. After a 40% drop in share price in 2022, Alphabet’s business has rebounded, with advertising revenues accounting for more than three-fourths of Google’s total revenue.

Investors are eagerly awaiting Alphabet’s first-quarter earnings report later this month, with average analyst forecasts predicting a record profit of nearly $19 billion. Analysts remain bullish on Alphabet’s prospects, with Oppenheimer analyst Jason Helfstein setting a price target of $185 per share, implying a $2.3 trillion market cap. As Google continues to innovate in AI and capitalize on its advertising revenue, the company is well-positioned for future growth and success.

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