Nvidia has marked its dominance in the artificial intelligence (AI) market, enjoying a remarkable surge in stock value—over 1,000% since the launch of ChatGPT, which catalyzed significant investments in AI infrastructure across tech companies. Currently, Nvidia boasts a market capitalization of about $4.5 trillion, but analysts project further growth, with a median price target of $250, representing a potential 30% increase from current levels, which could elevate its market cap to $6 trillion by 2026.
Yet as Nvidia continues to thrive, another AI contender, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), appears poised to give it a run for its money in the upcoming year. Alphabet has made significant strides in AI development, positioning itself to outperform Nvidia thanks to its robust momentum across hardware, software, and practical applications. This competitive edge is expected to translate into notable financial performance in 2026.
Alphabet’s Google Cloud division has seen substantial revenue growth, with a 34% increase reported last quarter and an impressive operating margin of 24%. The company’s backlog, standing at $155 billion—up 46% year-over-year—indicates strong demand for its services. A key player in this growth trajectory is Alphabet’s custom-built Tensor Processing Units (TPUs), which serve as a cost-effective alternative to Nvidia’s GPUs for AI training and inference.
In collaboration with Anthropic, Alphabet aims to leverage its TPUs for AI workloads starting in 2026. Meanwhile, discussions are reportedly underway with Meta Platforms to utilize these chips and adapt the popular AI framework PyTorch to the TPUs. The anticipated relative performance of TPUs against Nvidia’s offerings is expected to bolster Google Cloud’s growth, enhancing profit margins.
Alphabet’s advancements are not limited to infrastructure. The company has also excelled in developing large language models (LLMs). Its latest model, Gemini 3.0, released in November, has outperformed its peers, leading to a call for caution from OpenAI’s CEO Sam Altman, who noted that it surpassed GPT 5.1 in performance metrics. This success has driven increased interest in Google’s Gemini app, which reported 650 million monthly active users as of November.
In a strategic move, Apple is set to employ Gemini for new AI-driven features in Siri, agreeing to pay $1 billion annually to license the model. This arrangement allows Apple to run the model on its servers, creating a largely profitable scenario for Alphabet.
Beyond its competitors, Alphabet is leveraging its own AI innovations internally, enhancing its core search engine and advertising mechanisms. Features like AI Overviews and AI Mode have diversified search queries and improved monetization rates, helping to increase Google Search revenue, which rose 15% in the third quarter of 2025. YouTube also benefited from AI enhancements, recording a similar 15% revenue growth, bolstered by features that streamline content creation and improve user engagement.
Alphabet’s self-driving car business, Waymo, is gaining traction as well. The robotaxi service completed 14 million rides in 2025, more than tripling the previous year’s figures. Management anticipates reaching 1 million rides per week by the end of 2026, a trajectory that could contribute significantly to revenue growth as it expands into 20 new cities.
Overall, Alphabet presents a diversified growth opportunity at a reasonable valuation, trading at less than 30 times forward earnings expectations, compared to Nvidia’s valuation of over 40 times earnings. With the ongoing scaling of its cloud business and operational efficiencies, Alphabet is well-positioned to achieve strong earnings growth moving forward. This scenario raises the possibility that Nvidia may face challenges in maintaining its upward momentum amid increasing competition from Google’s TPUs and other custom AI accelerators.
Investors contemplating Alphabet stock should consider the insights of the Motley Fool’s Stock Advisor team, which recently identified the 10 best stocks for investment, notably excluding Alphabet from its selections. Although Alphabet has shown promising growth indicators, prospective investors might weigh this against the performance of other high-potential stocks.
As the AI landscape evolves, the competition between Nvidia and Alphabet is likely to intensify, making 2026 a pivotal year for both firms. With Alphabet’s innovative advancements and strong market strategies, it may well emerge as a more favorable investment choice in the near future.
Nvidia | Alphabet | OpenAI | Meta Platforms | Apple | Anthropic
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