Over the past year, Alphabet Inc. has transformed from an artificial intelligence also-ran into a company with dominant positions across nearly every facet of the technology. Now it stands on the verge of overtaking AI chip giant Nvidia Corp. as the world's most valuable company.
Google's parent company closed on Friday with a market capitalization of US$4.8 trillion. Nvidia, which had dipped below that level on Tuesday, rallied over three days to finish the week at US$5.2 trillion.
Alphabet's AI ecosystem
"Alphabet holds a significant spot in almost every corner of the AI ecosystem, and the combination of everything it offers puts it in a prime position to be the biggest winner of AI," said Luke O'Neill, chief investment officer at CooksonPeirce Wealth Management, which holds stakes in both Alphabet and Nvidia.
The gap between the two companies has narrowed dramatically over the past six months. Alphabet shares have surged, including a 34% gain in April, its best month since 2004. On October 31, Nvidia's market cap was US$4.9 trillion while Alphabet's was less than US$3.4 trillion. Since then, Alphabet's stock has soared 40%, while Nvidia's has risen just 6.3%, trailing the S&P 500 and the tech-heavy Nasdaq 100.
Alphabet shares fell as much as 2.3% on Monday, while Nvidia fluctuated between small gains and losses.
Diversified strength
Investors say it's logical that Alphabet would eventually claim the title of the world's largest company because its reach extends into so many critical areas of technology and the AI trade. Nvidia may lead in AI chips, but Alphabet has a competing product gaining traction. It also owns massive businesses such as Google Search, Google Cloud, YouTube, and Waymo. Additionally, Alphabet's Gemini AI model is considered among the best in the industry, and the company is a major investor in Anthropic, which produces the leading Claude model.
"Nvidia is a great company, but it has the potential to be far more cyclical should AI spending slow down," O'Neill said. "Alphabet is so diversified that if one business falters, the others can pick up the slack. You can't get a wider competitive moat than Alphabet has, and it seems like THE company of the internet era. So it would make sense if it were the biggest."
Market context
Alphabet was the largest stock in the market in early 2016 when it briefly surpassed Apple. As of Friday, Apple's market cap stands at US$4.3 trillion, followed by Microsoft Corp. at US$3.1 trillion and Amazon.com Inc. at US$2.9 trillion.
This earnings season demonstrated how Alphabet is emerging as the standout winner among Big Tech. It posted stronger-than-expected growth in its search and cloud businesses, and its tensor processing unit (TPU) AI chips have become a key attraction for customers. Chief executive Sundar Pichai said the chips will soon be available for Google Cloud clients to run in their own data centers.
Citizens analyst Andrew Boone wrote in a note on May 5 that Alphabet is expected to generate about US$3 billion of revenue from TPU-related infrastructure in 2026 and US$25 billion in 2027.
