Nvidia vs Alphabet: Which Stock Will Outperform in 2026?

The two top-performing “Magnificent Seven” stocks in 2025 were Nvidia (NVDA +1.49%) and Alphabet (GOOGL +0.86%) (GOOG +0.88%). As of this writing, Nvidia’s stock is up around 30%, while Alphabet has turned in a 60% gain.

Let’s see which stock is poised to outperform in 2026.

The case for Nvidia

Where artificial intelligence (AI) infrastructure spending heads, Nvidia’s stock is likely to follow. The company is the dominant player in the space with its graphics processing units (GPUs), and while competition has increased, no one is close to unseating the king. It still has a wide moat with its CUDA software platform, which is where most foundational AI code has been written, while its recent acquisition of SchedMD will only help widen its software moat.

Meanwhile, its NVLink interconnect system helps prevent vendor mixing and matching because it’s a proprietary system that lets its GPUs quickly pass along data and pool memory, allowing an AI cluster to act as a single powerful unit.

Meanwhile, the setup for the company looks attractive heading into 2026. All the major cloud computing companies have discussed ramping up data center capex spending next year, which bodes well for it. At the same time, the U.S. just gave it the green light to start selling its H200 chip to commercial Chinese customers, reopening a big market for it. In addition, large customer OpenAI is close to closing $100 billion in new funding, which should help it with its aggressive AI data center buildout.

On top of that, Nvidia’s stock is attractively valued, with a forward price-to-earnings (P/E) ratio of under 23 times 2026 analyst estimates and a price/earnings-to-growth (PEG) ratio of less than 0.7 times. Positive PEGs below 1 are generally viewed as undervalued.

The case for Alphabet

Alphabet’s biggest advantage is that it is the one major hyperscaler (owner of large data centers) that isn’t largely reliant on Nvidia. The company developed its own custom AI chips over a decade ago, and today most of its internal workloads are run on its tensor processing units (TPUs). That has given the company both a cost advantage with its cloud computing business, as well as with training its Gemini large language model (LLM) and running AI inference.

Google Cloud has been a huge growth driver for Alphabet, and that should only continue in 2026 as the unit has been capacity-constrained. Alphabet has been spending aggressively, which should result in Google Cloud’s growth accelerating. Alphabet also made an under-the-radar move the past couple of years with its chips that could lead to big growth.

TPUs were originally designed for Google Cloud’s TensorFlow framework, but Alphabet shifted its chips to be more framework agnostic, including supporting the popular PyTorch framework. This move allows it to rent out its TPUs to other companies. Anthropic is one of the first companies to jump on this opportunity, agreeing to deploy $21 billion in TPUs. Morgan Stanley has estimated that for every 500,000 TPUs deployed, Alphabet will generate around $13 billion in annual revenue. It’s currently projecting the company will rent out 5 million TPUs in 2027 and 7 million in 2028.

At the same time, Alphabet has trained its top-tier Gemini model on its TPUs, while it also runs inference with them. This gives it a significant cost advantage over competitors like OpenAI, allowing it to continue investing more money in its model and further improve it.

It also has the advantage of being able to integrate Gemini throughout its products, making them better. It essentially has what can be referred to as a “surface advantage,” bringing AI to the places where people already are, rather than relying on stand-alone apps and third-party integrations. These advantages should just continue to grow and drive revenue in 2026 and beyond.

The verdict

I think Nvidia and Alphabet should both have strong years in 2026. Both stocks are attractively valued with forward P/Es of 23 times and 27 times, respectively, and both should produce strong revenue growth.

However, of the two, I think Alphabet’s stock will once again outperform in 2026. It has a more durable business (it’s less cyclical and doesn’t rely on heavy customer capex spending), and I think the network effects of its model will really start to shine through next year, powering the stock higher.