Alphabet closes in on Nvidia as cloud boom and custom AI chips reshape tech hierarchy

Alphabet closes in on Nvidia's spot as world's biggest company

May 5 (Reuters) - Alphabet is on the cusp of overtaking Nvidia as the world's most valuable company, riding on a record stock rally fueled by its artificial intelligence efforts and booming cloud business. The potential reshuffling would put the Google parent (GOOGL.O), opens new tab at the No.1 spot for the first time in more than a decade. It last held that position briefly in February 2016 before Apple (AAPL.O), opens new tab reclaimed the spot. The move reflects a dramatic shift in sentiment as Alphabet emerges as both a major AI services provider with its cloud platform and a key rival to Nvidia (NVDA.O), opens new tab in chips through custom processors that have won customers such as Anthropic. The search giant has stunned Wall Street in recent months with cloud growth that far outpaced expectations and bigger rivals Amazon (AMZN.O), opens new tab and Microsoft (MSFT.O), opens new tab, giving investors confidence that its hundreds of billions of dollars in ⁠AI spending will pay off. "It's really about hyperscaler capex spend and, to some degree, early signs of better monetization - particularly from Alphabet - versus the broader AI 'food chain,' which includes data centers, grid and power," said Stephanie Link, chief investment strategist at Hightower Advisors. Nvidia's market cap last stood close to $4.79 trillion as of Tuesday morning, well off its all-time highs of around $5.2 trillion, whereas Alphabet was at $4.67 trillion, hovering near its all-time highs. Here's a look at how the Wall Street giant has fared as it approaches a historical high: Revenue of its Google Cloud segment grew 63% in the first quarter, well above what analysts had forecast and the growth rate was the highest since the company began breaking out the segment's revenue in 2020, according to LSEG data. "High demand for cloud and AI offerings drove a 'meaningful acceleration' in growth, indicating to investors that significant ⁠AI investments are paying off," Jeff Buchbinder, chief equity strategist at LPL Financial said. Investors think Google is scooping up a large chunk of new computing demand thanks to its AI tools for businesses and powerful custom chips. CEO Sundar Pichai said Google had started selling its AI chips, which compete with Nvidia's semiconductors, directly to some customers. Alphabet's shares have surged about 24% this year, while Nvidia's shares are up just about 7%. Nvidia's stock was knocked off its high after the ⁠Wall Street Journal reported last month that OpenAI had missed its goals for new users and revenue. Valued at about $4.5 trillion as of last close, Alphabet dwarfs the combined value of Germany (.GDAXI), opens new tab and Switzerland's main stock markets. The stock last traded at around 29 times its 12-month forward earnings, above its five-year average of ⁠22 and higher than the S&P 500's (.SPX), opens new tab valuation of around 21 times forward earnings. Nvidia's stood at around 21. Alphabet has been taking on OpenAI with a gusto that underscores Wall Street's perception that the company is the leader in AI, with its shares having surged 65.3% in 2025. The ⁠stock also got a boost last year after a U.S. judge ruled against breaking up the company and allowing it to retain control of its Chrome browser and Android mobile operating system. Reporting by Shashwat Chauhan and Aditya Soni in Bengaluru; Editing by Devika Syamnath Our Standards: The Thomson Reuters Trust Principles., opens new tab

Is Alphabet overtaking Nvidia? The AI chip king's reign is under threat - The Economic Times

Alphabet is closing in on Nvidia's position as the world's most valuable company. Strong growth in Alphabet's cloud and AI businesses is driving this shift. The company is also developing its own AI chips, challenging Nvidia's dominance. Investors are watching this evolving competition closely as Big Tech invests heavily in AI infrastructure.Alphabet is narrowing the gap with Nvidia in the race to become the world's most valuable company. As of Tuesday, Nvidia's market capitalisation stood at about $4.79 trillion, down from earlier peaks near $5.2 trillion, while Alphabet's valuation has climbed to roughly $4.67 trillion. The gap between the two companies is under $200 billion. Behind the rise The gap has narrowed after Alphabet delivered strong first-quarter 2026 earnings, riding largely on rapid growth in its cloud computing and AI businesses. Google Cloud revenue rose 63% year on year in Q1, crossing $20 billion for the first time. Overall revenue grew about 22% to $109.9 billion. Cloud computing businesses provide remote computing power, storage and AI infrastructure to companies over the internet. As demand for AI tools rises, technology companies are spending heavily on cloud platforms to train and run AI models. Competing with Nvidia At the same time, Alphabet is moving deeper into Nvidia's core market by developing and supplying its own AI processors, known as tensor processing units (TPUs). These chips are designed to handle AI workloads inside Google's cloud infrastructure. Anthropic has already committed significant long-term spending on Google Cloud and uses Google's AI infrastructure and chips to train and run AI models. Markets performance According to US markets data, Alphabet shares rose on Tuesday while Nvidia shares declined. Alphabet's Class C shares closed at $384.31, up 1.23% during regular trading, before climbing further to $390.79 in after-hours trading. Nvidia shares ended the session lower by about 1%. YOU SHOULD TAKE TUESDAY DATA Valuation metrics also show the changing market view. Alphabet is currently trading at around 29 times forward earnings, above its five-year average of 22 and higher than Nvidia's roughly 21 times. Forward earnings multiples measure how much investors are willing to pay today for a company's expected future profits. Higher multiples often indicate stronger expectations of future growth. Bottom line At the same time, Alphabet is significantly increasing spending on AI infrastructure. The company said it anticipates capital expenditure to touch $180-190 billion in 2026. Nvidia remains the leading AI chip company, but Reuters reported that investors are watching whether its profits can keep growing against the backdrop of large Big Tech AI spending and rising competition from hyperscalers developing their own chips. Also Read: Inside Big Tech's March quarter earnings: Here's all you need to know