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Alphabet crawls closer to $1 trillion after reporting earnings that beat expectations

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Trading Nation: Alphabet on the rise

Alphabet shares surged 5 percent to an all-time high and added around $50 billion in market cap after-hours on Monday after it reported quarterly earnings that beat Wall Street's expectations.

The tech giant is creeping closer to becoming the world's first $1 trillion company in what appears to be the priciest horse race of all time, against other mammoths like Apple and Amazon

Some chart-minded traders think that of the bunch, Alphabet stands the biggest chance of getting there first.

Alphabet's market cap grew to approximately $875 billion immediately following earnings, from $827.5 billion at the market’s close. This compares with Apple’s size of $941 billion and Amazon’s $880 billion.

The stock is poised to surge north of $1,500 per share and as high as $1,700, according to technician Todd Gordon, founder of TradingAnalysis.com. This would place the name well above the $1 trillion mark, according to a CNBC analysis of Alphabet’s A, B and C shares. At current levels, the stock would have to rally anywhere between 18.5 and 19.5 percent to touch that milestone.

“We have a very key level, just around $1,200, coincidentally. This was early 2018, we’ve broken above it and we’re coming back here retesting, trying to push up through on earnings. Now, earnings reports are expected to see a $55 move higher or lower. If it’s anything good and the Street likes it, then we should be able to continue on through,” Gordon said Friday on CNBC’s “Trading Nation.”

On a longer-term weekly chart, back to June 2010, an uptrend channel the stock has formed shows a projected move into the ballpark of $1,600 to $1,700 in the next year, Gordon pointed out.

“You have a beautiful uptrend parallel channel here, which should serve as resistance if Google gets a bid. That level doesn’t actually come in until you’re up around $1,600 to $1,700, so we certainly have room to go over the next year,” he added.

When it comes to the company’s quarterly earnings report, the key metric investors ought to watch is its core margin, said David Seaburg, head of sales and trading at Cowen. He told “Trading Nation” on Friday that Cowen expects Alphabet’s traffic acquisition costs to decelerate for the first time in 11 quarters. In other words, it’s forecast that Alphabet is paying less to its affiliates that funnel businesses’ and consumers’ traffic to the search engine itself.

“If they can keep their core margin at 35 percent or better, and revenue comes in relatively in line with their expectations, it should be fine, and I think the stock is going to work,” Seaburg said, adding that Alphabet has room to run, particularly given its relatively small rally this year compared with its other “FANG” counterparts.