NEW YORK CITY, New York: Alphabet is closing in on Nvidia to become the world's most valuable company, driven by a strong rally fueled by its artificial intelligence and cloud computing businesses.

The Google parent is now just behind Nvidia in market capitalization, with investors increasingly betting that its heavy investments in AI will translate into sustained growth. A shift at the top would mark Alphabet's return to the No. 1 position for the first time in over a decade, after it last briefly held the spot in 2016 before being overtaken by Apple.

The momentum reflects a broader change in market sentiment. Alphabet is emerging not only as a major AI services provider through its cloud platform, but also as a competitor to Nvidia in semiconductors, with its custom chips attracting clients such as Anthropic.

The company has exceeded expectations with rapid growth in its cloud division, outperforming rivals including Amazon and Microsoft. This has reassured investors that its large-scale spending on AI infrastructure is beginning to deliver results.

"It's really about hyperscaler capex spend and, to some degree, early signs of better monetization, particularly from Alphabet, versus the broader AI 'food chain,' which includes data centers, grid and power," said Stephanie Link, chief investment strategist at Hightower Advisors.

Alphabet's market value has climbed to about US$4.67 trillion, approaching Nvidia's roughly $4.79 trillion. While Nvidia previously peaked near $5.2 trillion, its stock has cooled in recent weeks.

A key driver of Alphabet's rise has been its cloud segment, where revenue grew 63 percent in the first quarter, well above analyst forecasts and the fastest pace since the company began reporting the unit separately in 2020.

"High demand for cloud and AI offerings drove a 'meaningful acceleration' in growth, indicating to investors that significant AI investments are paying off," said Jeff Buchbinder, chief equity strategist at LPL Financial.

Investors also see potential in Alphabet's custom AI chips, which CEO Sundar Pichai said are now being sold directly to some customers, positioning the company as a rival to Nvidia's dominant chip business.

Alphabet's shares have risen about 24 percent this year, compared with a roughly 7 percent gain for Nvidia. The chipmaker's stock has faced pressure following reports that OpenAI missed targets for new users and revenue.

Valued at around $4.5 trillion, Alphabet now exceeds the combined market capitalization of major European indices, including Germany's DAX and Switzerland's stock market. Its shares trade at about 29 times forward earnings, above both its five-year average and the broader S&P 500.

Alphabet's stock has also benefited from a favorable legal outcome last year, when a U.S. judge declined to break up the company, allowing it to retain control of key assets such as the Chrome browser and Android operating system.