Up 34% in April · 43% over six months vs Nvidia's 6.3% · TPU revenue projected at $25B by 2027.
Over the past year Alphabet has gone from supporting cast to the only company holding a dominant position across nearly every AI surface in the market. It is now sitting on the doorstep of overtaking Nvidia as the most valuable company in the world.
Alphabet's market cap currently stands at $4.8T. Nvidia briefly slipped under Alphabet midweek before a three-day rally pushed it back to $5.2T at the close. The gap reopened, but the picture is nothing like six months ago.
The board flipped in six months
On October 31 of last year Nvidia sat at $4.9T while Alphabet was below $3.4T. Since then Alphabet is up 43% and Nvidia is up just 6.3%. Nvidia has lagged the S&P 500 and the Nasdaq 100.
Alphabet rose 34% in April alone — its best monthly performance since 2004. A year ago, investors selling Alphabet were worried that Google's core search business would be eaten by AI. That narrative has fully flipped.
"Alphabet has everything you want in AI"
Alphabet has everything you want, so it is a name everyone can comfortably hold. It earns revenue in too many places — Search, chips, Cloud, YouTube, Gemini. Nvidia is great, but it's simply a chip maker.
Divyaunshi Devbhatia · Research analyst, Janus Henderson Investors
What is drawing investors to Alphabet is its structural diversification. Nvidia leads AI chips, but Alphabet has its own competitor product on that surface. Alongside heavyweight businesses like Search, Cloud, YouTube, and Waymo, Gemini is regarded among the top AI models. Alphabet is also a major investor in Anthropic — the maker of another leading model, Claude.
TPU is the new growth axis — $25B by 2027
Earnings season exposed another differentiator. Alphabet's Tensor Processing Unit (TPU) AI chip has become a central draw for customers. CEO Sundar Pichai said Google Cloud customers will soon be able to run TPUs directly inside their own data centers.
Citizens analyst Andrew Boone forecasts that Alphabet will generate roughly $3B in TPU-related infrastructure revenue in 2026 and $25B in 2027.
Valuation — "expensive, but not absurd"
Alphabet trades at 28x forward earnings — not dot-com territory, but well above its 10-year average of 21x and its richest multiple since 2008. The average analyst 12-month price target sits just 5.4% above today's price for a stock that has gained 160% in the last 12 months.
Nvidia could become much more cyclical if AI spending slows. Alphabet is so diversified that one shaky business can be offset by another. Buying a good company at a fair price is far better than buying a fair company at a great price — and this is a fair price.
Luke O'Neill · CIO, Cookson Peirce Wealth Management (citing Buffett)
Berkshire Hathaway initiated an Alphabet position last year — an unusual move from a Buffett team that has historically avoided tech.
