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Alphabet (NASDAQ:GOOG) and Nvidia (NASDAQ:NVDA) have been two of the best growth stocks to own this year. Both stocks have outperformed the S&P 500 over several years and have multiple AI catalysts that can lead to more gains. However, Alphabet has delivered higher returns than Nvidia over the past year, and that trend is likely to continue. Google’s parent company looks like the better AI stock, and there are a few reasons why.
Alphabet Can Take Over The Entire AI Ecosystem
Nvidia’s claim to fame is superior AI chips that big tech companies like Alphabet use for their applications and products. As AI spending continues to go parabolic, Nvidia’s chips should continue to generate strong sales. While Nvidia’s exposure to AI is mostly tied to chips, along with the CUDA software that powers those chips, Alphabet can cover more ground.
The tech giant is already using AI to enhance Google and YouTube, which has resulted in rising revenue and profits. Alphabet also continues to turn Gemini into a top AI model so it can keep competitors ChatGPT and Grok at a distance. However, it’s not just search. Google Cloud offers AI features and acts as the digital infrastructure for many AI tools.
In the long run, Alphabet’s Waymo can lead the autonomous vehicle industry, and it can also develop software that powers humanoid robots. Nvidia supplies chips, but Alphabet can do so much with the chips that it receives. Google’s parent company even produces its own AI chips, and Meta Platforms (NASDAQ:META) is considering a multibillion dollar order for some of Alphabet’s chips.
Nvidia May Face Pricing Pressure In The Future
It may still take multiple years for AI chipmakers to reach Nvidia’s current levels, but the firm is still facing more competition. For instance, OpenAI made an AI chip deal with Advanced Micro Devices (NASDAQ:AMD), and a Broadcom (NASDAQ:AVGO) deal came right after. Nvidia’s revenue and profits are still surging, but as AI chipmakers gain momentum, it can limit Nvidia’s future AI chip price hikes.
Alphabet has faced competition from AWS and Azure for years, so that’s nothing new. Nvidia has also faced competition for a while, but its AI chip dominance has been largely undisturbed. It’s also important to remember that Alphabet is one of Nvidia’s top customers, and the company may opt to lean more heavily into its AI chips in the future. Alphabet can make a similar move as Apple (NASDAQ:AAPL) when it stopped using Qualcomm’s (NASDAQ:QCOM) chips in its iPhones.
If Alphabet and any other tech companies follow that pattern and use their custom AI chips in the future, it can reduce Nvidia’s future growth rates. However, it’s unlikely that Nvidia faces this problem in 2026.
Alphabet Has Multiple High-Growth Multibillion Dollar Businesses
Google search, YouTube, and Google Cloud are all multibillion dollar businesses that continue to grow rapidly. Google Cloud, in particular, reported 34% year-over-year revenue growth in Q3 and made up roughly 15% of total sales. As Google Cloud expands, it will have a greater influence on future earnings, which should benefit investors.
Alphabet’s AI chips are on the verge of becoming a multibillion dollar business, and Waymo will likely reach that milestone as self-driving vehicles become more established. It’s hard for any business to compete with Alphabet’s influence, even Nvidia.
Google’s parent company has a real shot at becoming the world’s most valuable publicly traded corporation in 2026. It has already passed Microsoft (NASDAQ:MSFT) in market cap and should have no issue getting ahead of Apple on its way to Nvidia’s crown.