Forbes·2025-12-03 14:25Core Insights - Alphabet's shares have increased by 66% in 2025, potentially due to the strong performance of its AI chatbot, Gemini 3, which has outperformed ChatGPT [2][6] - A possible multi-billion dollar contract with Meta for Tensor Processing Units (TPUs) could further enhance Google's position in the AI chip market [3][10] AI Chip Market Dynamics - The AI chip market is projected to grow at an average annual rate of 25%, reaching $440 billion by 2030, with Google's market share expected to rise from 5% to 25% during this period [5][12] - Nvidia's market share in the AI chip sector could decline from 90% to 70% by 2030, indicating increased competition from Google [5] Competitive Landscape - OpenAI's ChatGPT faces challenges as Gemini's user base has grown by 44% to 650 million, while ChatGPT has over 800 million weekly users [6] - OpenAI's CEO has declared a "code red" to enhance ChatGPT's features in response to competitive pressures from Google and Meta [8] Financial Performance - Google's operating income over the last four quarters was $151.4 billion, surpassing Nvidia's $110 billion, providing Google with a financial advantage to compete in the AI chip market [9] - OpenAI is projected to incur net losses of $9 billion and $14 billion in 2025 and 2026, respectively, putting pressure on the company to secure additional funding [7] Future Projections - Google's TPUs could control 8% of the AI chip market by the end of 2025, with estimates suggesting a rise to 25% by 2030 [11][12] - The competitive dynamics are prompting pricing pressures, as evidenced by OpenAI negotiating a 30% discount on its Nvidia compute fleet [14] Investment Considerations - Wall Street views Alphabet shares as slightly overvalued, while Nvidia's stock is considered cheap, with Google's generative AI initiatives potentially making it a more attractive investment [15]