`I am really struggling to see what's the investment thesis behind Google valuation increasing 2x in response to AI`

Google is basically Nvdia (TPUs), Tesla (Waymo Self-Driving), Hyperscaler, Netflix (YouTube) and a massive VC (Anthropic, Databricks, SpaceX, etc.) all rolled into one.

Their valuation isn't really a 2x'ing so much as a reversion from halving.