Alphabet, Google's parent company, is closing in on the world's top spot by market capitalization. Leveraging what is known as its AI full-stack competitiveness — spanning search, cloud, artificial intelligence chips and models — the company is catching up to Nvidia at a rapid pace.
Alphabet's market cap stood at $4.83 trillion, according to financial information site CompaniesMarketCap on Monday. The gap with current No. 1 Nvidia, at about $5.23 trillion, is roughly $400 billion. Given that the market cap difference between the two companies was about $750 billion at the end of last year, the gap has narrowed by nearly half in less than six months. Alphabet briefly overtook Nvidia to become the world's most valuable company in after-hours trading that day.
Recent price action shows Alphabet's momentum overwhelming Nvidia's. According to Bloomberg, Alphabet shares surged 34% in April alone, marking the company's best monthly performance since 2004. Its 43% gain over the past six months stands in sharp contrast to Nvidia's 6.3% rise over the same period. The mood has shifted dramatically from a year ago, when concerns ran high that the spread of AI would threaten search, Google's core business. Alphabet's market cap had trailed Nvidia's ever since being overtaken on Feb. 14, 2024.
The turnaround stems from a reassessment of the company's AI business model. In addition to search and cloud, Alphabet has secured its Gemini AI model and Tensor Processing Unit (TPU) AI chips, emerging as a firm that dominates the entire AI ecosystem. Market attention has grown particularly after its first-quarter earnings release, which highlighted cloud growth as well as TPU competitiveness. "The combination of businesses Alphabet has assembled is the ideal setup to make it the ultimate winner of the AI era," said Luke O'Neill, chief investment officer at Cooksonpeirce Wealth Management.
The market's focus is now on when Alphabet will reclaim the No. 1 market cap position. If Alphabet takes the top spot, it would mark the first time since 2016, when the company overtook Apple.
However, fatigue from the short-term surge is cited as a variable. Wall Street's average price target for Alphabet is about $422, leaving only 5.4% upside from the current share price.
Another factor is Nvidia's $40 billion in equity investments across AI infrastructure this year alone. According to CNBC, Nvidia has invested in AI model operators including OpenAI, into which it poured $30 billion, as well as Anthropic and Elon Musk's AI firm xAI. It has also backed data center operator IREN, glass and optical fiber maker Corning, and optical technology firms Marvell, Lumentum and Coherent.
