Both companies are riding the AI wave, but one stock offers a better balance of growth momentum and valuation today.
There are many ways to bet on AI (artificial intelligence). But two channels are particularly interesting: suppliers of AI technology and beneficiaries of large-scale AI. In other words, you can buy “picks and shovels” – companies that sell chips and systems that power AI. Or you can invest in companies that integrate AI into existing products, services, and infrastructure used by billions of people.
Nvidia (NVDA 1.44%) and alphabet (GOOG 0.06%)(Google 0.04%) Of course, Nvidia is a technology supplier and Alphabet is an expanded technology platform, so it fits nicely into these buckets. Unsurprisingly, both stocks have been big winners as demand for AI soars.
But expectations for both companies are sky high, and the big question is which stock offers a better risk-reward setup at today’s prices.
Image source: Getty Images.
Nvidia’s growth trajectory remains impressive
Nvidia’s latest quarter shows why the company has become the face of the AI boom, as a maker of the primary graphics processing units (GPUs) that power AI data centers. In the third quarter of 2026 (ending October 26), Nvidia reported revenue of $57 billion, up 62% year over year. Data center revenue, the part of the business most associated with AI servers, rose 66% to $51.2 billion. And because of the company’s pricing power, Nvidia’s gross margin for the period was an impressive 73.4% on a generally accepted accounting principles (GAAP) basis. Earnings per share for the same period increased 67% year over year and 20% sequentially to $1.30.
Today’s changes
(-1.44%) $-2.67
current price
$183.14
Key data points
Market capitalization
$4.5 trillion
daily range
$180.80 – $184.46
52 week range
$86.62 -$212.19
volume
160M
average volume
184M
gross profit
70.05%
dividend yield
0.02%
These are unusual numbers. And they could have been better. Management noted that cloud GPUs were sold out at the end of the period.
AI is becoming a bigger factor in Alphabet’s growth profile
Alphabet’s latest reported quarter also saw clear AI-driven momentum. But the momentum also comes with broader momentum across Alphabet’s range of lucrative services, including online search, advertising technology, YouTube and Gmail.
Fueled by double-digit growth in search, YouTube, Google Cloud, and its subscriptions, platforms, and devices division, Alphabet’s third-quarter revenue rose 16% year-over-year to $102.3 billion, and earnings per share rose 35% to $2.87.
More importantly for the AI discussion, Alphabet’s Google Cloud, or its cloud computing business, is becoming an increasingly important catalyst for the company as a whole. Aplabet’s cloud revenue for the quarter rose 34% year over year to $15.2 billion. Additionally, cloud operating income increased 85% to $3.6 billion, and the segment’s operating margin expanded to 23.7%.
Additionally, Google Cloud’s backlog is actually growing much faster than its revenue. Google Cloud’s backlog increased 46% quarter-over-quarter and 82% year-over-year to $155 billion in Q3. The cloud backlog is growing so rapidly, which foreshadows the growth trajectory of this segment into 2026 and beyond.
Today’s changes
(-0.06%) $-0.19
current price
$336.24
Key data points
Market capitalization
$4.1 trillion
daily range
$331.20 – $337.03
52 week range
$142.66 – $341.20
volume
648K
average volume
23M
gross profit
59.18%
dividend yield
0.25%
Then there’s the new deal with Alphabet. apple (AAPL 0.46%). In a joint statement, Alphabet and Apple announced that they have entered into a multi-year collaboration in which the next generation of Apple Foundation Models will be “based on Google’s Gemini model and cloud technology” and power “future Apple Intelligence features, including a more personalized Siri” coming to Apple devices this year.
This is a meaningful distribution win for Alphabet. apple Devices is one of the world’s largest consumer technology platforms with well over 2.2 billion active devices. If Gemini is a fundamental part of how Siri and other Apple Intelligence features work, Alphabet now offers another way to stay at the center of how people interact with AI, even when they’re not using their Android phone or have a Google app open. Additionally, Apple’s vote of confidence comes at a critical time when businesses, developers, and consumers are still trying to decide which companies’ AI models are worth adopting.
It’s worth noting that for Alphabet, AI is not just a moonshot initiative, but a major contributor to the company’s overall finances. Yes, online search still plays an important role. However, cloud computing is currently bringing about major changes for businesses.
Better buy in 2026
After all, both companies are doing well and have great potential. The difference comes down to valuation and how much perfection is already built into each stock.
Alphabet currently trades at around 30 times earnings, while Nvidia trades at 46 times earnings. Yes, Nvidia’s business is growing faster than Alphabet’s, but is Nvidia’s business sustainable? Historically, the semiconductor industry has been cyclical. Additionally, with nearly every major technology company in the world simultaneously increasing spending on cloud infrastructure, it’s clear that Nvidia is currently benefiting from a boom in demand for AI computing power. This is interesting, but also why you should be careful. What happens when this spending subsides or takes a breather? So I think Alphabet’s business model is more diversified and less cyclical than Nvidia’s. For these reasons, I don’t think Nvidia deserves to trade at a higher price-to-earnings ratio than Alphabet, even though it’s a faster-growing company.
That said, while I think Alphabet is a better investment than Nvidia, this doesn’t mean Alphabet stock is a clear bargain. I actually think Alphabet stock is a bit risky as it stands. evaluation. Like Nvidia, Alphabet also faces risks. For example, the company’s cloud business could slow if the current AI boom proves unsustainable. Additionally, Alphabet’s dominant presence in online search tends to attract regulatory scrutiny. Finally, Alphabet’s business is deeply tied to advertising, and advertising is closely tied to the macroeconomic environment. If the economy slows, or worse, enters a recession, advertising could take a hit, putting stock prices under pressure.
Still, the combination of double-digit revenue growth, improving cloud profitability, and Gemini’s distribution boost through Apple makes Alphabet stock look like a good investment overall for investors with a high risk tolerance and willingness to hold for the long term.
