Why Alphabet (GOOGL) Stock Is Up Today

What Happened?

Shares of online advertising giant Alphabet (NASDAQ:GOOGL) jumped 3.1% in the morning session after the company’s market capitalization surpassed $3 trillion for the first time, buoyed by a wave of positive developments including a major cloud contract and favorable analyst commentary. 

The milestone, which makes Alphabet the fourth company to reach this valuation, was supported by several pieces of good news. Google Cloud secured a significant £400 million contract to deliver a secure cloud platform for the UK Ministry of Defence. 

Furthermore, YouTube's first global NFL game broadcast was a success, attracting 17.3 million viewers worldwide. Analysts reacted positively, with Citizens JMP maintaining its "Market Outperform" rating and a $250 price target, noting the strong viewership. Evercore ISI also increased its price target for Alphabet from $240 to $300, citing the company's continued dominance in commercial-intent search.

After the initial pop the shares cooled down to $249.61, up 3.7% from previous close.

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What Is The Market Telling Us

Alphabet’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 12 days ago when the stock gained 8.3% on the news that a U.S. judge's ruling in a major antitrust case eased fears of a forced break-up of the company. 

The decision allows Google to retain control of its key businesses, including the Chrome browser and Android mobile operating system, which the U.S. Department of Justice had sought to divest. Investors welcomed the news, seeing it as a "massive win" that helps the tech giant avoid the worst-case scenario. While the company was spared a structural break-up, the judge did bar Google from entering into certain exclusive search agreements in the future and will require modest data sharing with competitors. The ruling removes a significant regulatory overhang for the company. 

Following the news, analysts at Needham reiterated a 'Buy' rating and raised their price target from $220 to $260, signaling renewed confidence.

Alphabet is up 31.8% since the beginning of the year, and at $249.61 per share, has set a new 52-week high. Investors who bought $1,000 worth of Alphabet’s shares 5 years ago would now be looking at an investment worth $3,252.

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