Google surpasses $4 trillion! A new opportunity with collaboration alongside Apple?

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Options Trading in Action | Explosive! Google's market cap surpasses $4 trillion! Will those who missed NVIDIA also miss Google?

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*The following content is for educational purposes only and does not constitute any investment advice. The information is time-sensitive, so please exercise caution in your judgment.

Recently,Google (Alphabet) has surpassed Apple in market value for the first time since 2019, becoming the second-largest company by market capitalization in the US stock market, only behind NVIDIA. Google's stock price has surged nearly 65% cumulatively since 2025, leading among the seven major US tech stocks. The core reason is straightforward: The market is optimistic about Google’s AI transformation progress and growth potential.。

According to the latest news yesterday (January 12), Google (Alphabet) reached a multi-year artificial intelligence cooperation agreement with Apple. Apple chose Google’s Gemini to power the new AI version of Siri, which directly pushed up its stock price,with a market value breaking through the 4 trillion USD mark for the first time, becoming the fourth company to cross this ultra-high market cap threshold after NVIDIA, Microsoft, and Apple.

The market sees this collaboration as strong proof of Google's competitiveness in the AI field, which might add significant momentum to its robust growth trend.

So next, let’s comprehensively analyze this company,breaking down Google's investment value step by step from both fundamental and market perspectives, and finally providing an in-depth explanation of the corresponding options strategies.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

I. Behind the $4 Trillion Market Cap: Hidden Clues in Q3 Performance – Can Growth Continue?

Let’s start by reviewing Google’s Q3 report card, which was an outstanding performance exceeding expectations across all key metrics.

The message conveyed here is very clear:

Overall performance hit a record. Revenue exceeded the $100 billion mark for the first time in a single quarter, reaching $102.346 billion, representing a year-over-year increase of approximately 16%. The net profit growth rate (around 33%) significantly outpaced revenue growth, demonstrating strong profitability and operating leverage.

The core advertising business remains robust, with total revenue of $74.182 billion surpassing market expectations. YouTube maintained its leading position in streaming viewing time within the U.S.

The cloud business, acting as the growth engine, was particularly impressive, achieving a year-over-year growth rate of 34%. Moreover, the backlog of unfilled orders surged to $155 billion by the end of the quarter (a 46% increase from the previous quarter), providing extremely high visibility for future revenue. Management revealed that the number of $1 billion deals signed in the first three quarters of 2025 has already surpassed the total from the past two years.

The full-year capital expenditure plan was initially set at $75 billion but has been adjusted upwards to $91-93 billion, almost entirely allocated to AI-related data centers and chips, reflectingthe company’s firm commitment to AI. Judging from current visible realities, this determination is strongly supported.

On one hand, Google's AI monetization story is becoming a reality. In Q3, AI-driven revenue within the cloud business alone reached the 'multi-billion dollar' level. The advertising business also benefited from AI, with AI Overviews now covering over 2 billion users and starting to generate revenue.

On the other hand, Google's advantage in 'full-stack AI' is becoming increasingly prominent. Management emphasized that Google is the only cloud platform capable of simultaneously offering self-developed TPU chips, NVIDIA GPUs, the top-level Gemini model, and a broad application ecosystem, forming a unique competitive edge.

Investment shouldn't focus solely on the past but also on the future. So, what predictions does the market have for upcoming earnings?

Top-tier investment banks have generally raised their forecasts for Google’s performance. Following Q3 results, Morgan Stanley increased its earnings per share projections for Google's 2026/27 fiscal years by 7%/9%. Bank of America stated that Google is 'the biggest winner in the next phase of the AI wave,' given its most comprehensive positioning in monetization capabilities, return on investment, and long-term competitive advantages.

Based on recent research reports published by Bank of America, Goldman Sachs, and Morgan Stanley, the predictions and rationales for Google’s performance are as follows:

Q4 2025 forecast: Total revenue is projected to reach $108-110 billion, representing a year-over-year growth of 15%-17%; net profit is expected to grow 25%-28% year-over-year. The key rationale is the commencement of large-scale cloud business orders, along with advertising revenue growth driven by the Christmas holiday season.

Full-year 2026 forecast: Total revenue is estimated at $450-460 billion, reflecting a year-over-year growth of 14%-16%; net profit is anticipated to increase by 20%-23% year-over-year. The basis for this is that Google Cloud is expected to maintain annual growth of over 30%, with AI-related revenue driven by Gemini continuing to be realized, though substantial capital expenditures will slightly moderate profit growth.

Market consensus is that, driven strongly by cloud business orders, revenue and profit growth for Q4 2025 and the full year 2026 will remain at high double-digit levels.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

Secondly, moving from the present into the future, does Google’s ace card still hold strong momentum?

Google has been making frequent moves recently, sparking considerable discussion in the market. First and foremost, it is worth mentioning that Google’sAI business progress has been encouraging。

The Gemini app had reached 650 million monthly active users by Q3 and surpassed ChatGPT on the App Store download charts at one point. Moreover, Gemini 3, launched at the end of the year, outperformed key competitors in multiple benchmark tests, being hailed as 'a significant step toward AGI,' completely reversing its technical reputation. Additional data shows that Gemini’s average daily web traffic in December 2025 surged 567% year-on-year and grew 24% month-on-month, significantly outpacing competitors.

A major highlight was the breakthrough in proprietary hardware, with Google releasing its seventh-generation TPU chip, “Ironwood,” and successfully securing Meta as a TPU customer. This marks the market's recognition of its technological capabilities and signals a shift in the AI computing power landscape dominated by NVIDIA. The collaboration with Apple mentioned at the beginning is also strong proof of this point.

In competition, Googleis leveraging its vast application matrix—Gmail, Google Maps, Chrome browser, YouTube—that serves billions of users worldwide, using a combination of 'models + chips + ecosystem' to secure a more advantageous position.In cloud computing, it is narrowing the gap with AWS and Azure, while also posing direct competitive pressure on OpenAI in the AI model field (although OpenAI's newly launched AI browser is starting to challenge Google Search).

Additionally worth mentioning is that Googleis making strides across various cutting-edge technology fields.Waymo’s autonomous driving technology is accumulating real-world data; investments in quantum computing and geothermal energy projects are positioning Google for the next generation of computing paradigms and sustainable energy needs; as an early key investor in SpaceX, Google also stands to benefit from growth in the aerospace sector and opens up strategic synergies in communication networks and data. These all serve as hidden catalysts for its long-term value.

Of course, market sentiment about Google’s prospects is not entirely uniform.

The bullish perspective primarily rests onGoogle's AI monetization capability is entering a harvest period, with high visibility in cloud business orders and the deepest moat in its full-stack model.

In terms of cloud business, amidst the wave of enterprise AI adoption, Google, with its differentiated AI services and substantial order backlog, is well-positioned to continuously capture market share from AWS and Azure. Currently, Google Cloud holds less than 20% of the market share, while AWS and Azure together account for over 50%. As AI cloud services become more widespread, Google can leverage its technological advantages to seize a larger market share. Some institutions predict that by 2027, Google Cloud revenue could reach $120 billion, making it the second-largest public cloud provider globally.

Regarding the advantages of an all-stack AI ecosystem, Google is one of the few companies capable of handling chips (TPU), AI models (Gemini), and application ecosystems (Search, Cloud, YouTube). This end-to-end advantage reduces costs and enhances collaboration efficiency, which is critical in AI competition. Google is building a deep moat through its unique full-stack AI strategy and aggressive capital expenditure, laying the groundwork for long-term growth.

Concerns, however, lie inwhether record-high capital expenditures will continue to erode free cash flow (which already declined by 9% YoY in Q3) and profit margins; competitors like OpenAI have been relentless in their challenges from model to application layers—Gemini needs continuous investment in marketing and R&D to catch up, which would further increase costs; additionally, global antitrust regulations remain a long-term threat.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

In light of these opportunities and challenges, is Google (Alphabet) currently overvalued?

Looking at the current P/E ratio data, it is indeed not cheap. However, there are optimistic views in the market; for example, according to Bank of America, Alphabet is currently trading at about 24 times its estimated 2027 GAAP EPS, slightly above the average of 22 times since 2016. Considering its double-digit revenue growth expectations, expanding cloud business margins, and strong AI assets, this valuation level is reasonable.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

Three, Market Thermometer: Signals of Long-Short Battle Behind Technical Overbought and High Implied Volatility (IV)

*The following data is as of January 13, 2026, before the US stock market opens.

Let’s first look at Google's stock price trend. Based on the market data from the past month, Google has shown an upward trend with multiple technical indicators signaling bullish momentum.

The moving average system is showing a bullish arrangement, with the current stock price running above all major moving averages (5-day, 10-day, 20-day), indicating a solid upward trend. The Bollinger Bands show the stock price closely following the upper band, which has risen to $330.74, and the channel opening is widening, reflecting strong upward momentum. The MACD indicator's DIF and DEA lines are above the zero axis, with the fast DIF line crossing above the slow DEA line and continuing to rise, while the histogram is expanding, showing increasing upward momentum.

The KDJ indicator’s K and D values are both in the overbought zone above 70, with the J value approaching 96, indicating a short-term overbought condition. The 6-day RSI has reached 84.98, significantly higher than the overbought warning line of 70, suggesting that the stock price has risen too quickly in the short term, accumulating pressure for a technical pullback.

In terms of options data, the implied volatility (IV) is 38.58%, higher than the historical volatility (HV) of 19.75% for the same period, with its IV percentile at 77%, indicating that the options market pricing reflects expectations of higher price volatility.

Recently, call option trading volumes have consistently been higher than put option volumes, with the Put/Call volume ratio as low as 0.47. In terms of open interest, call option open interest is also significantly higher than put options, indicating that short-term sentiment among options traders is leaning optimistic.

Google will release its Q4 earnings on February 4, and the open interest for February-expiring options shows that more positions are concentrated in the $340 strike price Call and the $300 strike price Put, which could reflect some investors' bets on post-earnings performance.

In terms of capital flows, recent data shows net outflows over several days, particularly large outflows on January 7th and 8th, coinciding with the stock price breakout, possibly reflecting profit-taking behavior by some investors after positive news was realized.

Meanwhile, significant internal divergence is evident; for instance, on January 12th, despite overall net inflows, super-large orders saw a net outflow of $14.01 million, while large orders saw a significant net inflow of $46.89 million, suggesting differing views among institutional investors of varying sizes regarding short-term trends.

Additionally, short-selling data shows that the current market's willingness to short is not strong. The latest short ratio is 0.10357, lower than the one-month average of 0.1209. The latest short position ratio is 0.46%, a level below that of most stocks in the market, indicating limited accumulated short positions.

Overall, Google's technical trend remains strong, but short-term indicators suggest overbought conditions and potential pullback risks. Options signals indicate bullish market sentiment, but high IV in the short term reflects elevated volatility expectations, warranting caution against risks such as earnings falling short of expectations. Capital flow signals show short-term profit-taking pressures and notable divergence among investors.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

IV. Under uncertainty: Three option strategies to build a balanced approach for offense and defense

Based on the preceding analysis,Google is at a juncture where a 'compelling long-term growth story' coexists with 'short-term stock price being not cheap.' The core challenge ahead lies in: the robust AI growth narrative and earnings delivery needing to counterbalance the profit pressure brought by high valuation and massive capital expenditures. The stock price may remain volatile within a range until the Q4 earnings release on February 4 or subsequent significant updates on Gemini tip the scales.

At this point, directly buying or selling the stock seems somewhat passive, while options, as a flexible tool, can transform your specific market outlook (direction, volatility, timing) into a precise risk-reward structure.

Strategic thinking must revolve around two key data points: first, the implied volatility (IV) percentile is as high as 77%, indicating that option prices are expensive and unfavorable for buyers; second, the Q4 earnings announcement on February 4 serves as a pivotal event. Next, we will detail three option strategies suitable for different groups and scenarios.

Strategy One: Bull Call Spread – A bullish directional play with controlled risk

● Target audience and scenario: Suitable for investors who are optimistic about Google’s short-term performance (for instance, up to the Q4 earnings announcement in February) but believe the current stock price is already high, unwilling to chase it directly, and prefer controllable risk. In a high IV environment, this strategy reduces net costs by selling options, thereby increasing the probability of success.

● Strategy Logic: Buy a call option with a lower strike price (Long Call), while simultaneously selling a call option with the same expiration date but a higher strike price (Short Call). The premium received from selling the option offsets part of the cost of buying the option, thus lowering the breakeven point; however, this also caps the profit potential if the stock price rises significantly.

● Balancing expiration dates and strike prices：

Consider a time frame that 'covers the Q4 earnings event on February 4, allows the stock price sufficient time to develop a trend, and avoids rapid time decay from being too close to expiration,' such as 2-3 months.

The purchased Call can be at-the-money or slightly out-of-the-money to balance cost with upside participation; the sold Call is set based on expectations of the stock price’s upward movement. The width between the two Calls determines the risk-reward ratio: the wider the spread, the higher the potential profit, but the higher the net cost and the greater the increase required to reach maximum profit.

● Profit and Loss Characteristics: Potential maximum profit is limited to (higher strike price - lower strike price - net premium cost per share) * number of contracts. Potential maximum loss is limited to the net premium paid when constructing the strategy. Break-even point = lower strike price + net premium cost per share.

For specific profit and loss scenarios at expiration, refer to the chart below for educational purposes only and not as investment advice.

● Key Considerations: Profits are capped—if the stock price surges due to unexpected strong results, profits above the strike price will be missed. If the stock price falls, be prepared to lose the entire net premium. Also, beware of a possible sharp drop in implied volatility (IV) after earnings, which could impact the market value of the entire options position.

Strategy Two: Short Put – Selling Out-of-the-Money Put Options for Income Enhancement and Buying at Lower Prices

● Target audience and scenario: Suitable for investors who are neutral-to-bullish, believing that Google's stock price is unlikely to experience deep pullbacks under a strong trend, or those willing to buy the underlying stock at a lower price. In a high implied volatility (IV) environment, this strategy generates relatively high premium income.

● Strategy Logic: Constructed by selling an out-of-the-money Put option. If the stock price is above the strike price at expiration, the entire premium is earned; if the stock price is below the strike price, there is an obligation to buy the stock at the strike price. The essence of this strategy is to short volatility and profit from the decay of the option's time value, as well as from a sideways or upward movement in the stock price, while providing the possibility to buy the stock at a price lower than the current market price.

● Balancing expiration dates and strike prices: You can choose a period where the time value decays relatively quickly, but without resulting in poor risk-reward ratios, such as options expiring in 30 to 45 days. The strike price represents the price at which you are willing to take delivery of the stock, and should be selected at a level that you consider strong support where the stock price is unlikely to fall below. This can be based on technical analysis support levels or by choosing out-of-the-money options with an absolute Delta value between 0.2-0.3.

● Profit and Loss Characteristics: Potential maximum profit is limited to the full premium received when selling the option. The potential maximum loss is theoretically large—if the stock price falls to zero, the maximum loss would be (strike price * number of contracts - premium income), but for core assets like Google, the more realistic risk is taking delivery at a price higher than the market price. Break-even point = strike price - premium income per share.

For specific profit and loss scenarios at expiration, refer to the chart below for educational purposes only and not as investment advice.

● Key Considerations: Ensure the account has sufficient cash or collateral available in case of assignment. If the stock price plunges, there may be significant losses or risks of being forced to buy at high prices. Therefore, it is crucial to carefully select the strike price, control position size, or be prepared to hold quality assets long-term after assignment.

Strategy Three: Covered Call – Selling covered call options to enhance cash flow while holding stocks

● Target audience and scenario: Suitable for long-term investors who already hold Google stock, believe that the short-term increase has been too large, and expect high volatility. They aim to leverage a high implied volatility (IV) environment to generate extra cash flow, reducing holding costs or hedging downside risks.

● Strategy Logic: Based on holding 100 shares of Google stock, sell one corresponding out-of-the-money call option. This is equivalent to using the stock as collateral to collect premiums. If the stock price does not exceed the strike price, the premium becomes pure profit; if it exceeds, the stock will be sold at the strike price to lock in gains.

● Balancing expiration dates and strike prices: Choose an expiration date where time decay accelerates relatively quickly while providing decent premium income, such as 30 to 45 days out, which also facilitates rolling operations. The choice of strike price determines the level of income enhancement and the probability of the stock being sold, leaving sufficient room for potential upside. For instance, consider out-of-the-money options with a Delta between 0.2 and 0.3.

● Profit and Loss Characteristics: Potential maximum profit is limited to the premium received plus (strike price * number of contracts - stock purchase cost). Potential maximum loss is the same as holding the stock alone, but the collected premium can partially offset downside losses.

For specific profit and loss scenarios at expiration, refer to the chart below for educational purposes only and not as investment advice.

● Key ConsiderationsThis is a strategy that gives up potential upside for certainty of income. If the stock price rises significantly due to better-than-expected earnings, you will miss out on gains above the strike price. Therefore, this strategy is more suitable for volatile or moderately rising market conditions. If you are very bullish on the future market, you can choose a more out-of-the-money Call or hold off on taking action for now.

$Alphabet-C (GOOG.US)$$Alphabet-A (GOOGL.US)$

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