Alphabet’s Jolly Good Rally

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Now, one wouldn’t have thought it possible, but Alphabet, that rather substantial concern which shelters Google within its ample bosom, has been experiencing a most agreeable upward surge. Shares, you see, took a bit of a leap on Wednesday, climbing a respectable 3.3% before settling down for a 2.4% gain by the close of play. Not a positively riotous increase, perhaps, but jolly good considering the stock had already been putting on the dog with a 65% rise in 2025 and another 5% to start 2026. A bit like a particularly athletic aunt unexpectedly winning the egg-and-spoon race, one might say.

The impetus for this cheerful advance appears to be a confluence of factors, a sort of financial happy accident. The recent unpleasantness regarding Greenland and NATO, which had sent investors into a bit of a flutter yesterday, seems to have calmed down, and that’s always a good thing. But the real spark, as near as one can tell, came from the observations of Mr. Demis Hassabis, the bright spark behind Google DeepMind, at the Davos World Economic Forum. A clever fellow, that Hassabis, and clearly one who knows his way around the digital landscape.

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Ten Times the Industrial Revolution, What Ho!

Now, Hassabis didn’t merely offer platitudes, you understand. He declared, with a dash of justifiable pride, that Google’s models are “back to state of the art” following the November launch of Gemini 3 and its rather ingenious Nano Banana image-generation contraption. A most impressive feat, if one may say so. What’s more, he pointed out that Alphabet’s unique ownership of the entire AI shebang—from the initial research to the finished product—gives them a distinct advantage. It’s rather like having a complete set of tools for a particularly complex jigsaw puzzle, don’t you see?

The secret, it seems, lies in Alphabet’s knack for combining cutting-edge research – they practically invented the core technologies all these AI companies are using, like that clever ‘transformer’ business – with products that can actually use said technology. Search, email, video, even self-driving cars – the lot! And to top it all off, they design their own chips and build their own data centres. A most cost-effective arrangement, wouldn’t you agree? Hassabis, in a moment of quiet confidence, suggested that this puts them in a structurally sound position to continue their success. “Structurally,” he said, “from first principles, we should be doing very well, and there’s a lot more headroom to come from here.” A dashedly clever assessment, if I may say so.

One hears whispers that OpenAI, a rather ambitious rival, still relies on renting expensive GPUs from Nvidia. A bit like hiring a chauffeur when one could perfectly well learn to drive oneself, wouldn’t you say? It works, of course, if one maintains a lead in AI models. But Gemini 3, launched a mere two months ago, appears to have erased that lead, at least for the time being. And, in a rather sporting gesture, Hassabis declared that Alphabet has no intention of cluttering Gemini with advertisements, whilst subtly implying that OpenAI’s recent foray into advertising within ChatGPT was… well, let’s just say it wasn’t entirely cricket. “It’s interesting they’ve gone for that so early,” he remarked, with a twinkle in his eye. “Maybe they feel they need to make more revenue.”

How Much Headroom, Indeed?

Now, just how much “headroom,” or potential for further gains, does Alphabet possess, according to Hassabis? Well, he ventured to suggest that the AI revolution will be “10 times bigger and 10 times faster than the industrial revolution.” A rather bold claim, perhaps, but one can’t help but be swept away by the enthusiasm. If his prediction holds true, and if Alphabet can maintain its newfound competitive edge, last year’s stock market gains may be just the opening act. And, at a P/E ratio of 32, the stock doesn’t seem particularly expensive for a company poised to lead the charge into this brave new world of artificial intelligence.

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2026-01-22 00:02