Here’s why Alphabet stock is rising

Jacob Wolinsky ValueWalk

The tech giant led a big Nasdaq rally.

Shares of Alphabet (NASDAQ: GOOG), the parent company of Google, were surging on Monday, up about 6% to lead a big tech stock rally.

Alphabet’s gains were fueled in part by bullishness over its new updates to its Gemini AI chatbot, Gemini 3. The company calls Gemini 3 “our most intelligent model, that combines all of Gemini’s capabilities together so you can bring any idea to life.”

Alphabet CEO Sundar Pichai cited its advancements in reasoning and its ability to grasp depth and nuance.

“Gemini 3 is also much better at figuring out the context and intent behind your request, so you get what you need with less prompting,” Pichai said in a blog post.

Further, Gemini 3 will be available in AI Mode in Google Search and on the Gemini app.

Gemini has been gaining users and market share as the company says it has some 650 million users per month. While OpenAIʻs ChatGPT remains the far and away leader in the space with 73% market share, Gemini has grown to gain a 13% market share, roughly the same as Microsoft Copilot.

Investors are banking on Gemini 3 and its technological advancements to drive further market share gains for Google.

Alphabet added to Buffett portfolio

It has been a good couple of weeks for Alphabet. Two weeks ago, Warren Buffett and Berkshire Hathaway took a massive position in Alphabet, buying 17.8 million shares for a $4.3 billion investment. It is the first time Berkshire Hathaway has invested in Alphabet stock.

Alphabet has outperformed other Magnificent 7 stocks in recent weeks, returning about 22% over the past month. All the other Magnificent 7 stocks are in the red over the past month, except Amazon, which is basically flat.

Alphabet’s gains led a strong tech rally on Monday, as the Nasdaq Composite was up nearly 600 points, or 2.7% on Monday, while the S&P 500 gained around 102 points, or 1.6%.

A major reason that Alphabet is outperforming its peers is its relatively low valuation, combined with its earnings momentum.

Other than Meta, which missed Q3 earnings, Alphabet is the cheapest Magnificent 7 stock, with a P/E ratio of 29 and a forward P/E of 27.

Alphabet stock has a median price target of $330 per share, which suggests about 3% upside after Monday’s rally.

Author

Jacob Wolinsky

ValueWalk

Jacob Wolinsky is the founder of ValueWalk, a popular investment site. Prior to founding ValueWalk, Jacob worked as an equity analyst for value research firm and as a freelance writer. He lives in Passaic New Jersey with his wife and four children.

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