(Bloomberg) — Over the past year, Alphabet Inc. has grown from an artificial intelligence consequentialist to one of the market players with dominant positions in nearly every aspect of technology. The company is currently on track to overtake AI chip giant Nvidia and become the world’s largest company.
Most Read Articles on Bloomberg
Luke O’Neill, chief investment officer at Cookson Perth Wealth Management, which owns shares in Alphabet and Nvidia, said: “Alphabet has important positions in almost every corner of the AI ecosystem, and when you combine everything it has to offer, it’s well positioned to be the biggest AI winner.”
Google’s parent company closed on Friday with a market capitalization of $4.8 trillion. Nvidia was below that level on Tuesday, but a three-day rally over the weekend lifted it to $5.2 trillion.
The gap between the two has narrowed considerably over the past six months as Alphabet stock has fallen sharply, including a 34% gain in April, its best month since 2004. As of Oct. 31, Nvidia’s market cap was $4.9 trillion, while Alphabet’s was less than $3.4 trillion. Since then, Alphabet’s stock price has risen 43%, while Nvidia’s stock has only risen 6.3%, lagging behind the S&P 500 and the tech-heavy Nasdaq 100 index.
Investors argue that with its tentacles extending into so many important parts of the technology industry and AI trade, it stands to reason that Alphabet will eventually become the world’s largest company.
Nvidia may be the leader in AI chip development, but Alphabet has a rival product that’s gaining popularity. It also owns a number of large businesses, including Google Search, Google Cloud, YouTube, and Waymo. Additionally, Alphabet’s Gemini AI model is considered one of the best in the industry, and the company is also a significant investor in Anthropic, which has another major model in Claude.
“NVIDIA is a great company, but it has the potential to become more cyclical if AI spending slows,” O’Neill said. “Alphabet is so diversified that if one business slumps, the others can pick up the slack. You don’t get a wider competitive moat than Alphabet, and Alphabet is like an Internet-era company. So it makes sense that Alphabet is the biggest.”
Alphabet briefly surpassed Apple in early 2016 to become the market’s largest stock. As of Friday, Apple had a market capitalization of $4.3 trillion, followed by Microsoft with $3.1 trillion and Amazon.com with $2.9 trillion.
This earnings season demonstrated that Alphabet is emerging as a standout winner among Big Tech. In addition to posting better-than-expected growth in its search and cloud businesses, the company’s tensor processing unit (TPU) AI chips have become a key attraction for customers. Google Cloud customers will soon be able to run it in their own data centers, CEO Sundar Pichai said.
Citizens analyst Andrew Boone said in a May 5 note to clients that Alphabet expects to generate about $3 billion in revenue from TPU-related infrastructure in 2026 and $25 billion in 2027.
“Everything you want”
“Alphabet has everything you want, which is why everyone feels comfortable owning it, because there are so many ways to win within AI,” said Divyaunsh Dibhatia, research analyst at Janus Henderson Investors. “We get revenue from so many sources: search, chips, cloud, YouTube, Gemini. I still like Nvidia. Nvidia is still a very powerful company, but it’s just a chip maker.”
Alphabet’s rise represents a stunning reversal. Less than a year ago, investors were dumping shares as the company’s core search engine business became a potential victim of AI disruption. Things started to change when Alphabet started incorporating AI into Google Search and Gemini became one of the most popular AI chatbots.
Analysts are now rapidly raising their earnings estimates. Over the past month, the consensus estimate for Alphabet’s 2026 net income has increased by about 19%, and its 2027 forecast has risen more than 7%, according to data compiled by Bloomberg.
However, despite Wall Street’s enthusiasm, extending Alphabet’s rally may be difficult. Analysts’ average price target for the next 12 months is approximately $422, representing a 5.4% increase from Friday’s closing price. That’s a big change for a stock that’s up 160% in the past 12 months.
Of course, there is a risk that Gemini and other top AI models will be overtaken by rivals. Alphabet’s share price struggles last year illustrate how quickly sentiment can change in the age of AI.
Alphabet stock trades at 28 times estimated P/E, which is hardly the nosebleed valuation of the dot-com era. However, this is well above the company’s 10-year average of less than 21 times, and near the company’s highest multiple since 2008.
Cookson Perth’s Mr O’Neill said: “It’s not unreasonable to think that this multiple could be maintained or even increased even if we were no longer able to acquire songs.” “I would not hesitate to purchase for a new account.”
In this regard, he also quoted Warren Buffett, who said, “It’s far better to buy a great company at a fair price than to buy a fair company at a great price.” In a tacit endorsement, Buffett’s Berkshire Hathaway bought Alphabet stock last year, an unusual high-tech investment for the famed value investor.
“This is a fair price, even if it’s not shockingly cheap anymore,” O’Neill said. “There is no doubt that this is a great company.”
Most Read Articles on Bloomberg Businessweek
©2026 Bloomberg LP
