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Sundar Pichai, chief executive officer of Alphabet Inc., during the Bloomberg Tech conference in San Francisco, California, US, on Wednesday, June 4, 2025. David Paul Morris | Bloomberg | Getty Images
Alphabet briefly passed Nvidia by market cap in after-hours trading this week, a remarkable feat for a company that was seen as deeply at risk in the early days of the artificial intelligence boom. The stock is up about 160% in the past year, driven higher by an emerging view on Wall Street that Google is well positioned across the AI landscape, whether it's from the company's homegrown models, its massive distribution network or its cloud unit that's reeling in cash from other booming AI businesses. Among tech's seven other trillion-dollar companies in the U.S., chip designer Broadcom is the next best performer over the past 12 months, with its stock up 107%. "Google is one of the two best-positioned AI companies because they own most of the stack," said Gene Munster, managing partner at Deepwater Asset Management. "Chips, models, infrastructure and distribution. On top of that, they're nicely profitable."
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The other company he put in that category is Elon Musk's SpaceX, which merged with xAI in February in a deal valued at $1.75 trillion. Following Alphabet's earnings report last week, JPMorgan analysts called the stock their "top overall pick" in the tech sector, pointing to a "standout quarter," accelerating growth and a cloud backlog that nearly doubled to $462 billion. Mizuho analysts raised their price target, writing that consensus estimates still significantly underestimate Google Cloud revenue and operating income over the next two years. Alphabet closed the week with a market cap of $4.8 trillion, behind only Nvidia at $5.2 trillion. The two flip-flopped momentarily after markets closed on Tuesday following a report that AI model developer Anthropic committed to spend $200 billion on Google Cloud over five years for 5 gigawatts of compute. For investors, it was the latest sign that Google has many ways to make money and compete at the cutting edge. There's Gemini and DeepMind for AI models and research, Google Cloud for compute, tensor processing units (TPUs) as an alternative to Nvidia, and the ability to add AI features into search, YouTube and Android.
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There are reasons to be skeptical, however, in the eyes of some analysts. A primary area of concern is how much of the backlog could be coming from Anthropic, a cash-burning and richly valued startup that's raising tens of billions of dollars from Google and, in turn, is spending much of that money with Google on cloud services and TPUs. If the reported $200 billion Anthropic commitment is measured against Alphabet's reported cloud backlog, it could represent more than 40% of future contracted revenue.
The next Oracle?
Gil Luria, an analyst at D.A. Davidson, said the setup is reminiscent of what happened at Oracle , which saw its stock soar in September after the company reported a backlog increase of almost 360%. It soon became clear that most of that was from OpenAI. "They did it the same way Oracle did," said Luria, who recommends holding Alphabet shares. "They told us their backlog roughly doubled without telling us that almost the entire increase came from one deal with Anthropic."
Google didn't provide a comment for this story, pointing only to CFO Anat Ashkenazi's commentary on the last earnings call. Oracle was punished after investors realized a major share of its backlog growth was tied to OpenAI, with the stock losing about half its value over five months. Microsoft has faced similar questions around its OpenAI exposure. Luria sees concentration risk across the major cloud providers. Microsoft, Oracle, Amazon and Google together have close to $2 trillion in reported cloud backlog. Nearly half of that, Luria said, traces back to commitments from OpenAI and Anthropic, which are both tapping that same set of companies for capital. Munster understands the concern but doesn't share it, at least as it pertains to Google and Anthropic. "The deal underscores how early we are in AI," Munster said. "Even though the use cases are limited today, the need for compute is exponential. Google will ride that wave." If Anthropic stumbles, Munster says, other AI companies will eventually replace it. "The headlines about size and risk of any given customer miss the point," he said. "If one of those customers blows up, over time there will be dozens to take its place." Where Google has a clear and emerging advantage is in custom silicon.
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