Alphabet, the parent company of Google, is eyeing a $2 trillion valuation.
The value of Wall Street's most valued corporations has lately increased.
Splitting stocks is a technique used by firms to entice investors.
In 2000, Tesla and Apple divided their stocks to make them more marketable.
WHY IN NEWS
On Wednesday, Alphabet, the parent company of Google, moved closer to joining Apple and Microsoft in the $2 trillion (approximately Rs. 1,49,71,186 crore) market valuation club, as the search giant's shares soared more than 8% following a strong quarterly report. Alphabet's shares was on course for its highest one-day % rise in over two years, closing at around $2,975 (approximately Rs. 2.22 lakh), soothing fears about owning Big Tech after a sector-wide selloff in recent weeks. Alphabet's stock market value climbed well above $2 trillion shortly after the market opened, and was last valued at $1.97 trillion (roughly Rs. 1,47,46,618 crore). This includes insiders' class B shares, which do not trade on the public exchange.
The company's first closing above $2 trillion would be a first for the Mountain View, California-based firm. 'The technology industry began 2022 with some of the most significant uncertainties since the dotcom disaster more than 20 years ago,' said Russ Mould, investment director at AJ Bell. 'Yet, the biggest and highest-quality US tech businesses continue to provide the market with the answers it seeks in the form of significant earnings beats.' Even as authorities across the world probe them over charges of privacy breaches and antitrust issues, shares of Wall Street's most valuable businesses have surged in the last two years, pushed by pandemic-driven transformations in how people work and learn.
At least 20 brokerages upped their price estimates on Alphabet shares after the firm reported record quarterly sales that exceeded forecasts late Tuesday. The consensus analyst price objective for the stock is now $3,450 (approximately Rs. 2.58 lakh), which is 16 percent higher than the current price. Alphabet also announced a 20-to-1 stock split, giving stockholders 19 shares for every one they now own. Companies split stocks in order to entice investors by making them more inexpensive. However, certain brokerages, like Robinhood, enable investors to acquire fractional shares, making this strategy less effective. In the year 2000, Tesla and Apple divided their stock to make it more enticing to small investors.
'The split will make the shares more accessible to ordinary investors and will likely allow inclusion in the Dow Jones Industrial Average (which is still share price-weighted), but it will have no fundamental impact,' said J.P. Morgan analyst Doug Anmuth. Meta, the parent company of Facebook, was up 1.1 percent at the time of writing, with earnings due out after the bell on Wednesday. Advanced Micro Devices' stock soared over 5% as its earnings above Wall Street estimates, adding to the tech market rally. Rivals Nvidia, Qualcomm, and Micron also saw their stock prices rise.