Since the beginning of 2023, a tech rally has boosted countless technology stocks. Advances in high-growth sectors such as artificial intelligence (AI) have highlighted the enormous potential of companies operating in related fields such as chip design and cloud computing. NVIDIA (NVDA -2.10%) has been one of the biggest beneficiaries of the bull run, with its shares up 785% since January 2023.

The company has benefited from increased demand for AI chips and its ability to supply the majority of the market with its hardware. At the beginning of last year, Nvidia’s market capitalization was $360 billion. But recent growth makes the company the first chipmaker to be valued at more than $3 trillion, joining the ranks of companies such as Apple And Microsoft.

Nvidia’s meteoric rise raises the question: Which company could be next to reach such a milestone?

As the fourth most valuable company in the world alphabet‘S (GOOGL -1.11%) (GOOG -1.13%) With a market cap of $2 trillion, the company is in a great position to cross the $3 trillion threshold next. The tech giant has become a cash cow with growth catalysts in multiple markets. At the same time, the chart below shows that its stock is one of the best bargains in the technology space.

Data from YCharts

Alphabet stock is up 19% year-to-date, adding more value than any of these companies except Nvidia. Yet Alphabet has the lowest price-to-earnings (P/E) ratio among its peers, suggesting its stock offers the most value.

So here’s an undervalued stock that could join Nvidia in the $3 trillion club.

Growth catalysts across the entire technology sector

Alphabet has a strong position in the technology sector and has expanded into several sectors of the industry. Strong brands such as Android, YouTube, Chrome, and Google’s many products have made Alphabet the go-to platform for dozens of major services. The popularity of these platforms has helped the company gain a sizable user base. In 2023, the company operates nine platforms that have reached one billion or more users.

Alphabet’s dominant role in the technology sector is largely thanks to consistent reinvestment in the company and a willingness to try new ventures. This strategy has resulted in a long list of now-defunct products, including Google Hangouts, Stadia, and Google Glass. However, Alphabet’s willingness to invest in promising industries has also allowed the company to land lucrative roles in digital advertising, cloud computing, and AI.

The company has leveraged its massive user base to sell ads across its various platforms, a business that now accounts for 78% of its revenue. The digital advertising industry is worth about $740 billion and is growing at a compound annual growth rate (CAGR) of 7%, with Alphabet accounting for 26% of all global ad sales.

However, Alphabet’s biggest growth driver over the past year has been Google Cloud, with an 11% market share in cloud computing. The platform is expanding rapidly, delivering 29% year-over-year revenue gains in the second quarter of 2024. Cloud computing has become one of the fastest-growing areas of AI, an industry that is growing at a compound annual growth rate of 37% through 2030.

Google Cloud outperformed market leaders Microsoft Azure and Amazon Web Services reported revenue growth in the second quarter of 2024 and showed no signs of slowing down. The platform is expected to grow earnings for years to come.

Alphabet has been achieving steady growth for years

Alphabet is known for its steady growth. In fact, a $10,000 investment in its stock in 2014 would be worth nearly $58,000 today.

The tech giant has proven itself to be a king when it comes to reliability, suggesting that it is a question of when rather than if its market cap will hit the $3 trillion mark.

Data from YCharts

The last five years have not been easy for many technology companies. 2020 saw a global pandemic and several years of economic uncertainty. However, the chart above shows that Alphabet’s earnings and share price still grew by triple digits during this period.

The Google parent company’s free cash flow reached $61 billion this year, proving that the company has the resources to continue investing in its business and keep up with its rivals. Its P/E ratio of 24 is shockingly low compared to its peers, suggesting that now is the time to invest in this undervalued stock that will likely put Nvidia in the $3 trillion club before it’s too late.