Google’s finally hit its stride in the AI race, and investors seem to have rewarded the firm for its efforts.
As of January 7, 2026, Alphabet (Google’s parent company) has surged past Apple to claim the position of the world’s second most valuable company, with a market capitalization of $3.892 trillion compared to Apple’s $3.863 trillion. NVIDIA maintains its commanding lead at $4.604 trillion, while Microsoft follows in fourth place at $3.593 trillion. The top eight is rounded out by Amazon ($2.582T), TSMC ($1.652T), Meta ($1.635T), and Broadcom ($1.628T).
A Tale of Two Tech Giants
The past year has painted starkly different pictures for these two former tech rivals. Google’s stock has soared an impressive 65% over the last twelve months, climbing from around $197 in late January 2025 to its current price of $322.43. The momentum has been particularly strong in recent months, with the stock up 2.51% today alone.
Apple, meanwhile, has shown more modest gains of just 7.26% over the same period, currently trading at $260.33. The iPhone maker’s stock actually declined 0.77% today, contributing to Google’s overtaking moment. The contrast in investor sentiment couldn’t be clearer.
Google’s AI Renaissance
The driving force behind Google’s market cap surge has been its aggressive and successful push into artificial intelligence. The company’s Gemini 2.5 Pro and Gemini 3 Pro models have proven to be genuine competitors in the large language model space, earning praise from developers and enterprises alike for their performance and capabilities.
Beyond raw model capabilities, Google has demonstrated a keen understanding of how to bring AI to consumers. The launch of Nano Banana, an AI-powered image editor, has attracted millions of new users to Google’s ecosystem, showcasing the company’s ability to translate cutting-edge AI research into accessible, popular products.
Perhaps most significantly for Google’s long-term positioning, the company’s Tensor Processing Units (TPUs) have emerged as credible alternatives to NVIDIA’s dominant GPUs. Major AI companies including Anthropic and SSI (Safe Superintelligence Inc.) have adopted Google’s TPUs for their training and inference workloads, giving Google a crucial foothold in the lucrative AI infrastructure market. This hardware play diversifies Google’s AI strategy beyond software and services, positioning it to capture value across the entire AI stack.
Apple’s Innovation Stagnation
The contrast with Apple is striking. Over the past year, the Cupertino giant has failed to release any breakthrough products or meaningfully integrate AI capabilities into its flagship devices. While competitors have raced to embed intelligent features into every aspect of their products, Apple’s iPhones, iPads, and Macs have seen only incremental updates with minimal AI functionality.
This innovation gap has not gone unnoticed by investors, who increasingly view Apple as a mature hardware company rather than a technology leader pushing the boundaries of what’s possible.
The AI Valuation Premium
Google’s ascent past Apple underscores a broader trend in the market: companies with credible AI strategies are commanding premium valuations. Of the top eight most valuable companies, six are American firms deeply invested in AI infrastructure and applications. NVIDIA leads the pack as the primary supplier of AI chips, while Google, Microsoft, Meta, Amazon, and Broadcom all have significant AI initiatives driving their growth stories.
Even TSMC, the lone non-U.S. company in the top six, owes much of its $1.652 trillion valuation to its role manufacturing the advanced chips that power AI systems.
For now, Google has proven that late entrants to the AI race can still win if they execute well. The question is whether Apple can mount a comeback or if it will continue to cede ground to rivals who saw the AI future first.