The Motley Fool·2025-12-28 06:10Core Viewpoint - Alphabet is outperforming Nvidia in 2025, with a projected gain of over 65% compared to Nvidia's 40% increase, driven by strong earnings and AI positioning [4][2]. Company Overview - Alphabet, the parent company of Google, dominates the search engine market with over 90% market share, generating significant revenue from advertising [5]. - The company has diversified its revenue streams with Google Cloud, which has seen a 34% revenue increase due to demand for AI infrastructure and services [6]. Financial Performance - Alphabet achieved its first-ever $100 billion quarter, showcasing the strength of its advertising business and growth in Google Cloud [8]. - The company has a market capitalization of $3.8 trillion and a gross margin of 59.18% [8]. Legal and Regulatory Environment - A recent favorable ruling in a U.S. antitrust case has alleviated major risks for Alphabet, as the judge ruled against the breakup of Google, positively impacting investor sentiment [9]. Valuation and Investment Potential - Alphabet is trading at 29 times forward earnings estimates, making it a more attractive option compared to Nvidia, which may draw in investors looking for reasonably priced AI stocks [10]. - The advertising segment is expected to continue delivering revenue increases, providing a level of security for investors amid fluctuating AI spending [12].