Prediction: This Will Be the Next $5 Trillion Company

Nvidia (NASDAQ: NVDA) sits alone as the only company that's worth $5 trillion or more. Still, there's another company knocking on the door of this exclusive club: Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Alphabet isn't too far off and currently has a market cap of nearly $4.8 trillion, so it could reach this exclusive valuation fairly soon.

While a $5 trillion valuation is a notable point to reach, what's next for Alphabet? After all, long-term investing is a lot more than just a couple of percentage points gained to cross an arbitrary mark.

Image source: Getty Images.

Alphabet has gone from last to leader in just over a year

At the start of 2025, Alphabet was lagging in the artificial intelligence (AI) build-out. Despite its massive resources, it was way behind in the generative AI model race, and several questions remained about the longevity of its Google Search business. However, Alphabet has largely addressed both issues and now offers one of the leading generative AI models, seamlessly integrating AI into Google Search, which has modernized the search engine and maintained its profitability. In Q1, Google Search's revenue rose an impressive 19% year over year, an impressive mark for how mature this business unit is.

Alphabet is also seeing major demand for its cloud computing resources. That segment saw revenue growth of 63% in the first quarter, and was boosted by sales of Tensor Processing Units (TPUs) to external clients. Google Cloud is becoming one of the best locations to build AI applications on, and it's showing up in Alphabet's finances.

This bodes well for the future of Alphabet, and the market is clearly excited about its prospects, as the stock is up over 25% year to date. However, it's not as cheap as it once was.

I think a proper valuation metric for Alphabet's stock is the price-to-operating cash flow. This metric eliminates the effects of large capital expenditures or investment gains and focuses on how much cash the business produces.

GOOG Price to CFO Per Share (TTM) data by YCharts

Over the past decade, Alphabet has never been valued this high. So, does that make the stock overvalued? Not necessarily. Apple has traded for more than 30 times its operating cash flow for a while, and Microsoft was also valued above that mark until recently.

Alphabet is more expensive than it has ever been, but it's not an out-of-line valuation. This means that the near-term upside is relatively capped compared to some other companies, and until Alphabet starts seeing even more growth for its AI division, its upside is less than that of some of its peers. Alphabet is a surefire bet to cross the $5 trillion threshold next, but if you're looking for maximum upside, there are other options to consider.

Keithen Drury has positions in Alphabet, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.