AI business helps Alphabet surpass competitors and is expected to exceed NVIDIA to become the world's most valuable company

In the past year, Alphabet Inc. has transformed from a company that was late to the artificial intelligence (AI) field into a dominant player in almost all technology aspects in the market. Now, the company is poised to surpass AI chip giant NVIDIA to become the world's most valuable company.

“Alphabet holds a significant position in almost every area of the AI ecosystem, and the combination of all its services makes it highly likely to be the biggest winner in the AI field,” said Luke O’Neill, Chief Investment Officer of CooksonPeirce Wealth Management, which holds shares in both Alphabet and NVIDIA.

Alphabet, the parent company of Google, closed last Friday with a market capitalization of $4.8 trillion. NVIDIA's market capitalization was below this level last Tuesday, but a rise over the next three days pushed its market cap to $5.2 trillion.

Over the past six months, as Alphabet's stock price soared, with a 34% increase in April marking its best monthly performance since 2004, the gap between it and NVIDIA has narrowed significantly. On October 31, NVIDIA's market cap was $4.9 trillion, while Alphabet's was just under $3.4 trillion. Since then, Alphabet's stock price has surged by 43%, while NVIDIA's stock price has only risen by 6.3%, lagging far behind the S&P 500 index and the Nasdaq 100 index.

Investors say it is logical for Alphabet to eventually claim the title of the world's most valuable company, as its reach extends into many important aspects of the tech industry and the AI field.

While NVIDIA may be a leader in the AI chip sector, a product under Alphabet is gradually gaining market favor. Alphabet also has numerous large-scale businesses, such as Google Search, Google Cloud, YouTube, and Waymo. Additionally, Alphabet's Gemini AI model is considered one of the best models in the industry, and the company is also a significant investor in Anthropic, which owns the Claude model.

O’Neill stated, “NVIDIA is a great company, but if spending in the AI field slows down, its cyclical fluctuations may be larger. Alphabet's business is very diversified; even if one business encounters problems, others can compensate for the losses. Alphabet has a wider competitive moat and appears to be an iconic company of the internet era. Therefore, it makes sense for it to become the most valuable company.”

Alphabet's market cap briefly surpassed Apple in early 2016, becoming the highest-valued stock at that time. As of last Friday, Apple's market cap was $4.3 trillion, followed by Microsoft at $3.1 trillion and Amazon at $2.9 trillion