While much of tech saw red in November, it was a strong month for Alphabet (GOOG +1.01%) (GOOGL +1.04%), with shares of the Google parent rising 13.9% from the closing bell on Oct. 31 to the end of November's trading. The S&P 500 ticked up 0.1% over the same period, though it had dropped as much as 4.4% mid-month, while the tech-heavy Nasdaq Composite finished down 1.5%, having fallen as much as 6.9%.
Fears of an artificial intelligence (AI) bubble weighed on much of the market, but Alphabet was able to shrug them off because, in large part, the company helped ignite this latest iteration of AI bubble talk in the first place.
NASDAQ: GOOGL
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Gemini 3 proves Google can compete without Nvidia's chips
Google's release of Gemini 3, its latest AI model, directly challenged Nvidia and OpenAI's place at the heart of the AI boom. Gemini 3 was not only received as a significant improvement on the latest models from its competitors, but critically, it was trained not with Nvidia's chips, but Google's.
These chips -- called TPUs -- are specifically designed and optimized for the kinds of operations that Google uses to train its models, making them both cheaper to produce and cheaper to run. This was a big moment for the industry, which had been largely operating under the assumption that in order to produce the best AI models, you needed Nvidia's latest GPUs.
Image source: Getty Images.
Gemini 3's obvious quality is a wake-up call for Nvidia and other semiconductor companies. If Google continues down this path and other hyperscalers follow, Nvidia's pricing power could be in danger.
It's also a major win for Alphabet, validating Google's long-term bet on custom silicon.
Google must renegotiate its search contracts every year
December hasn't been as kind to Alphabet shares, which are down slightly in the first days of the month. On Friday, a judge ordered Google to limit its default search contracts to a maximum of one year as part of an earlier ruling that the company had built a search and advertising monopoly. The company must now renegotiate its search contracts each year, including a critical deal with Apple, which makes it the go-to iPhone search engine.
I think that Alphabet is one of the best picks among big tech. If AI delivers on its promise, Alphabet will reap the rewards. If it doesn't, Alphabet's stock will undoubtedly get hit, but its core business will remain incredibly strong, and shares will recover.
