The Motley Fool·2025-12-29 00:00Core Insights - Nvidia has experienced significant stock performance, increasing over 1,000% since the launch of ChatGPT, benefiting from the AI spending surge among major tech companies [1] - Analysts predict Nvidia's market cap could reach $6 trillion by 2026, with a median price target of $250, representing a 30% increase from current levels [2] Nvidia's Position - Nvidia is recognized as a leading chipmaker for AI infrastructure, particularly for training large language models [1] - However, it may face challenges in maintaining its growth trajectory as competitors like Alphabet gain momentum in AI applications and hardware [17] Alphabet's Growth and Performance - Alphabet's Google Cloud division reported a 34% revenue growth last quarter, with an operating margin of 24%, and a backlog of $155 billion, up 46% year-over-year [5] - The demand for Alphabet's custom-built Tensor Processing Units (TPUs) is increasing, providing a cost-effective alternative to Nvidia's GPUs for AI training [6] - Alphabet's large language model, Gemini 3.0, has outperformed competitors, leading to increased consumer engagement and a potential partnership with Apple for AI-powered Siri features [7][8] Financial Strength and Innovations - Alphabet's innovations in AI are enhancing its core business, including search and YouTube, with Google Search revenue up 15% in Q3 2025 [11] - YouTube also saw a 15% revenue growth, driven by AI features that improve user engagement and monetization [12] - The self-driving car business, Waymo, is expanding rapidly, completing 14 million trips in 2025 and aiming for 1 million rides per week by the end of 2026 [13] Investment Perspective - Alphabet is viewed as a diversified growth stock with a favorable valuation, trading at less than 30 times forward earnings expectations, compared to over 40 times for Nvidia [15] - Strong earnings growth is anticipated as Alphabet's cloud business scales and operating margins improve, providing opportunities for share repurchases [16]