I once called Alphabet (GOOG) the cheapest stock in the market.

I even placed it in my Perfect Portfolio.

Not because it was small. Not because it was overlooked.

But because a $2 trillion company with world-class assets was being valued like a legacy search engine past its prime.

That was in March.

Fast forward to today and the stock has surged 12% over the past month and more than 100% since I labeled it “cheap.”

What makes the move even more impressive is the backdrop.

Almost every AI related stock has sold off recently.

Expectations cooled, sentiment faded, and the AI trade that dominated the past few years has finally taken a breather.

Yet Alphabet is still going up.

Why?

The reason is simple. Alphabet is finally getting credit for two major business lines.

1. Gemini 3: The Top Performing LLM in the World

Alphabet’s Gemini 3 is now the top model across the major independent benchmarks.

It leads in reasoning, search, speech, video, and problem solving.

That advantage matters because Alphabet can drop Gemini into almost any product it owns, including Search, YouTube, Android, Workspace, and Cloud, and reach billions of users instantly.

And with OpenAI reportedly valued at around $500 billion despite trailing on performance, the market is finally starting to price Gemini’s strength into Alphabet’s stock.

2. Google’s TPUs are Suddenly in Demand

For years Alphabet built its own AI chips and only used them internally.

That is now changing.

Reports last week revealed that Meta is negotiating to buy Alphabet’s TPUs for future data center buildouts, with potential rentals beginning through Google Cloud as soon as 2026.

If this becomes official, Alphabet would instantly become a real competitor in AI hardware – a market almost entirely owned by Nvidia.

With GPU supply constrained globally, big tech companies are desperate for alternatives.

Alphabet is stepping into that opportunity and investors are taking notice.

These two developments matter because they introduce business lines that were not previously included in Alphabet’s valuation.

This brings me back to the valuation framework I used earlier this year.

When I first broke down Alphabet using a sum of the parts approach, I valued:

• Core Business of Google Search, YouTube, Google Cloud, and ads at about $2.1 trillion.

• Waymo and AI at roughly $600 billion.

• Other Bets at around $50 billion.

• Total value = $2.75 trillion.

At the time, Alphabet’s total market cap was just $2 trillion, suggesting the stock was materially undervalued.

Today, Alphabet’s market cap is now $3.8 trillion so let’s revisit these estimates.

Core Business: Now About $2.6 Trillion

Ever since ChapGPT launched (3 years ago yesterday!) investors treated Google Search like it was in decline.

People worried AI chatbots would replace search queries and eat into ad revenue.

That simply has not happened.

Search continues to grow. YouTube continues to dominate. Cloud continues to gain share. And Alphabet keeps expanding its footprint across the internet.

Given that strength, it is reasonable to place a 25 times earnings multiple on the Core Business – revised higher from 20x previously. That gets me to an estimated value of around $2.6 trillion.

Waymo and AI: Now Closer to $1 Trillion

My previous estimate of $600 billion now looks too conservative.

Waymo is operating fully autonomous vehicles in major US cities while competitors still talk in future tense.

On top of that, Google now has the number one model in Gemini 3.

Together, these capabilities could easily support a valuation closer to $1 trillion.

Remember, OpenAI is currently valued at $500 billion on its own.

Other Bets: Now About $250 Billion

This category used to be a grab bag.

Health tech projects. Infrastructure ideas. Quantum. Moonshot experiments.

But now it includes something far more tangible – A potential multibillion-dollar TPU business that could put Google on the map as a major AI hardware supplier.

If Meta is seriously exploring a multi-year chip deal, others could follow.

A conservative estimate for this business line alone is about $250 billion.

So… What Happens Next?

Add these updated pieces together and the picture becomes clearer.

Alphabet is not simply an advertising giant anymore.

It is a leader in AI models, a potential supplier of AI hardware, a frontrunner in autonomous driving, and still one of the most profitable companies ever created.

It deserved a higher valuation than the market assigned to it back in March and finally got it.

That said, I definitely wouldn't consider Alphabet the “cheapest stock” anymore.

The upside from mispricing has largely played out and I am now starting to look for other opportunities that haven't yet been recognized by the market.

For now, Alphabet remains in my Perfect Portfolio.

But its journey from undervalued sleeper to market darling is a perfect reminder of why identifying overlooked companies early can pay off in a big way.

Stay tuned for the stock I plan to rotate in next.