Alphabet could become the world's most valuable company, says analyst. What are the chances?

Alphabet, the holding company of Google, may top the list of the world's most expensive companies in the future, according to the analytical company MoffettNathanson. The analysts believe that Google's leadership in the field of artificial intelligence and key market segments will help it become a leader. However, Wall Street is worried whether the company will be able to hold its position after its shares have risen 70% from their April low.

On September 25, analyst Michael Neutenson of research firm MoffettNathanson raised his target price on Alphabet shares from $230 to $295, which implies they are up nearly 20% from their closing price on Wednesday, September 24. The updated target was close to the highest on Wall Street, which is $300. Also, the analyst retained the recommendation to buy securities of the holding company Google.

"The combination of market leadership, diversification and scale makes Alphabet not just a winner in the era of generative AI, but a company well deserving of the title of the world's most valuable," Neutenson wrote in a note cited by Bloomberg.

The analyst emphasized that Google still remains "the benchmark in generative AI search." According to Neutenson, Alphabet has resources and distribution channels that are "beyond the control of [ChatGPT artificial intelligence developer] OpenAI".

"Google is no longer cautious - the company has accelerated the cycle of bringing [to market] AI products and is releasing new products one after another. We see this as a turning point: from a reactive strategy to a proactive one, now with the position of a company that dictates the pace of innovation."

At the trading on September 25, quotations of shares of Alphabet Class A at one point declined by 2.6%, but then slowed down to about 0.7%. Since the low of 2025, reached in early April, Alphabet securities have risen in price by more than 70%. At the end of the last session, the growth since the beginning of the year exceeded 30%, which is almost twice as good as the return of the Nasdaq 100 index (+17%).

However, such rapid growth may seem excessive, writes CNBC: according to LSEG, the average analysts' target is now 5% below the current price. Nevertheless, Wall Street is generally positive about Alphabet. Of the 64 analysts tracked by LSEG, 52 recommend buying the stock.

On September 15, Alphabet became the fourth company in history with a market capitalization of $3 trillion. Now the capitalization of Alphabet, according to Stock Analysis, is slightly short of this mark. Leading the list is Nvidia ($4.3 trillion), followed by Microsoft ($3.79 trillion) and Apple ($3.74 trillion).

- While the market is cheering Alphabet for its growing adoption of Google's artificial intelligence Gemini, Melius Research analyst Ben Reitzes expressed doubts about the methodology for accounting for search queries handled by AI, especially amid reports of diminishing returns on advertising. "Alphabet is doing well in the cloud, and Gemini does have a growing number of subscribers, but problems remain in search: our checks show that AI performance doesn't give the same return on advertising [as clicking on a link in search]," CNBC quoted Reitzes' note as saying. - Alphabet deserves this rise [in stock], but Microsoft's [securities] still deserve a significant premium."

Reitzes also noted that "Alphabet may be outperforming Microsoft too much." Google's stock jumped 41% in the quarter, while Microsoft's jumped just 2%. "This outperformance comes even despite Microsoft's excellent June quarter results and strong outlook for Azure," the analyst pointed out. "Microsoft's stock likely remains under pressure due to uncertainty surrounding its relationship with OpenAI (the primary driver of Azure), especially beyond 2030, but this partnership will support the company for a long time to come."

- Truist analyst Yousef Squali on Monday reiterated a buy recommendation on Alphabet shares, CNBC writes. "We maintain a positive view on Alphabet as we believe the company continues to dominate the search market with a share above 90%, despite the growth in users at new AI-powered generative platforms," Squali said. He said Google leads in key commercial queries, while AI search now accounts for only about 1% of all referral traffic and a negligible share of conversions. "The growth in search queries and new usage scenarios indicates that the emergence of AI chatbots is expanding the potential search market, rather than working to its detriment."

- Dan Niles, founder and portfolio manager of Niles Investment Management, told CNBC that he is still betting on Alphabet for the long term. "Alphabet will end up building the best AI app, especially because it has, thanks to YouTube, the most free data in the world," he believes.

- Wolfe Research analyst Shweta Khajuria wrote in a Sept. 16 note cited by CNBC, "Google continues to impress with its AI features. We've tested the product ourselves and are not surprised to see it topping the download charts in the App Store. Given the sustainability of advertising budgets, ongoing product updates and growing cloud market share, Google remains among our top recommendations for the near term."

This article was AI-translated and verified by a human editor