Nvidia (NVDA 4.26%) continues to dominate the global artificial intelligence (AI) landscape for several good reasons. The company's third-quarter fiscal 2026 (ending Oct. 26, 2025) performance was stellar, with revenues growing 62% year-over-year to $57 billion. The data center segment alone contributed $51.2 billion in revenues. The company's earnings per share soared 67% year-over-year to $1.30.
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Nvidia's Blackwell architecture systems are seeing strong adoption, with the newer GB300 systems accounting for nearly two-thirds of the total Blackwell revenues. Management has guided to $65 billion in revenues, plus or minus 2%, in the fourth quarter. The company further expects to earn $350 billion from orders for Blackwell and Rubin systems over the next 14 months, while an additional $150 billion in orders have already been shipped.
Nvidia estimates the annual AI infrastructure opportunity to be worth $3 trillion to $4 trillion by the end of 2030. The company expects to capture a significant share of this opportunity, with its full AI stack comprising cutting-edge GPUs, networking solutions, and a software ecosystem, and its commitment to an annual product cadence. With data center revenues growing over 60% year-over-year, networking revenues more than doubling, and GPU supply falling short of demand, Nvidia's growth story remains strong.
However, another company is well-positioned to deliver even higher share-price returns in 2026. While it does not sell GPUs, the company has made rapid advancements in its AI capabilities and has successfully integrated these into its core offerings. That company is Alphabet (GOOG +0.58%) (GOOGL +0.51%).
Here's why Alphabet's stock may outperform Nvidia's in the coming year.
NASDAQ: GOOGL
Key Data Points
Robust performance
In the third quarter of fiscal 2025, Alphabet's revenues were up 16% year-over-year to $102.3 billion. This was the first quarter in the company's history to exceed $100 billion, with AI technologies playing a crucial role in driving the growth of its Search, YouTube, and Google Cloud businesses.
The Gemini app reached 650 million monthly active users at the end of the third quarter, with total queries also increasing threefold from the previous quarter. Alphabet is also leveraging AI extensively across its offerings, as evidenced by the over 1.3 quadrillion monthly tokens processed by the end of the third quarter, representing over 20x year-over-year growth.
AI strategy
Alphabet's AI infrastructure runs on a combination of Nvidia's GPUs and its own purpose-built TPUs. The company's latest 7th-generation high-performance Ironwood TPU will be generally available in the next few weeks. Ironwood is already seeing solid demand, with Anthropic planning to deploy up to 1 million TPUs.
Alphabet is also witnessing increased enterprise demand for its frontier AI models. In November, Reuters and Bloomberg reported that Alphabet was in ongoing discussions with Apple (AAPL +0.98%) to license its new 1.2 trillion-parameter AI model to power Siri, at a cost of roughly $1 billion annually. If completed, this deal can open a new high-margin revenue stream for the company.
While Alphabet is not directly competing with Nvidia on the hardware front, its proprietary, cost-optimized TPUs are playing a crucial role in powering its AI models for billions of users, especially as GPU supply remains short of soaring demand. The company's Search business is seeing more total queries and commercial queries driven by AI Overviews and AI Mode features, while YouTube is benefiting from AI-powered content recommendation and creation tools.
Google Cloud is also benefiting from Alphabet's full-stack AI approach, which combines its custom TPUs and proprietary generative AI models. Google Cloud revenues were up 34% year-over-year to $15.2 billion, while operating margin improved year-over-year by 6.6 percentage points to 23.7% in the third quarter. Google Cloud's backlog also exited the third quarter with a backlog of $155 billion, highlighting its strong revenue visibility.
NASDAQ: NVDA
Key Data Points
AI strengthening business
Despite Alphabet's diversified business model and robust technology, investors are concerned about the long-term impact of generative AI on the company's search business.
These worries can drag on the company's share prices. However, the management's recent commentary on this issue has been assuring. AI Overviews has now reached over 2 billion users, while AI Mode has over 75 million active daily users. Coupled with the massive scale, AI Overviews is also monetizing at the same rate as traditional search results. The company has also rolled out AI Max in Search in September 2025, opening billions of incremental queries to improve ad targeting for its huge advertiser base.
AI has also proven to be a key catalyst in driving the adoption of Google Cloud. More than 70% of Google Cloud customers are now using AI offerings, and nine of the world's ten leading AI labs are working with Google Cloud.
Hence, it is apparent that Alphabet is gradually converting the risk of AI disruption into a solid growth opportunity.
Valuation
Alphabet currently trades at 29.6 times earnings, well below Nvidia's price-to-earnings (P/E) ratio of 44.3x. The valuation looks conservative for Alphabet, considering its scale, diversified revenue base, and impressive AI technologies. The company operates 13 separate businesses with an annual run rate of over $1 billion.
Management has estimated capex of $91 billion to $93 billion in 2025 and even higher in 2026. Since a significant chunk of these capital investments will be allocated for servers, data centers, and networking equipment, Alphabet's AI projects should continue to gain momentum in the coming months.
Hence, considering its strong Search business, rapidly scaling Google Cloud business, full-stack AI strategy, and reasonable valuation, there is a solid chance of a multiple expansion for Alphabet in 2026. This revaluation, coupled with rapidly growing top and bottom lines, can propel Alphabet's stock price returns ahead of that of Nvidia in 2026.
