The artificial intelligence (AI) boom is creating big winners in tech. Two companies that have reaped the benefits from AI's growth -- and are likely to continue to do so for years -- are Nvidia (NVDA 1.53%) and Alphabet (GOOGL 1.67%) (GOOG 1.68%).
It's tempting to overlook some of the biggest AI stocks at this stage of the AI stock frenzy in search of smaller players with more potential for outsized growth. But when looking for great companies that can go the distance, putting $5,000 into clear leaders with established competitive advantages might be a better way to go.
Here's why Nvidia and Alphabet deserve a spot in your portfolio right now and for years to come.
Image source: Getty Images.
Nvidia will benefit from the latest surge in AI spending
There are two important reasons why Nvidia continues to be a leading AI stock: It holds about 86% market share in AI data center processors, and spending for AI infrastructure continues to rise to dizzying levels.
Nvidia's processor designs are highly sought after for AI data centers, giving it a significant advantage over competitors like Advanced Micro Devices. This lead has driven a surge in data center revenue for the company, with the latest boost totaling more than $51 billion in data center sales in the third quarter -- a 67% increase from the year-ago quarter.
There are legitimate concerns that AI spending will slow at some point, but that's not even close to happening yet. Meta Platforms, Microsoft, Alphabet, and Amazon all recently announced that they're significantly increasing their capital expenditures this year (mostly going to data center infrastructure), with their collective spending expected to top $650 billion.
As more companies invest in AI infrastructure, Nvidia's processor dominance is likely to continue for years to come. Its lead in AI processors is solidified by the fact that tech companies running its processors use Nvidia's CUDA software, which Morningstar research says gives Nvidia an "incumbency advantage."
NASDAQ: NVDA
Key Data Points
Alphabet is gaining lots of ground in AI, and its stock is cheap
Alphabet is another tech leader benefiting immensely from AI. The company houses its AI sales in its Google Cloud segment, and in the fourth quarter, cloud sales spiked 48% to $17.7 billion. There's likely more on the way, as Alphabet recently started a collaboration with Apple in which Apple will pay Alphabet for use of its Google Gemini chatbot as the underlying AI model for an upcoming version of Siri.
The deal will reportedly be worth $1 billion per year for Alphabet, with those sales structured as cloud revenue. It will also help Alphabet stay more competitive in the chatbot space. OpenAI's ChatGPT is the leader right now, with 700 million weekly users, but Gemini has made some huge strides lately. Gemini now has 750 million monthly active users, up from 400 million in mid-2025.
NASDAQ: GOOGL
Key Data Points
To continue making more gains in AI, Alphabet recently said it would more than double its capex spending this year, to up to $185 billion. Much of this money will go to data center infrastructure, and it could help ensure that the company continues to offer the best AI products across Search, Google Worksuite products, Android, and elsewhere.
With billions of users worldwide and Alphabet's Google Gemini quickly becoming a core part of users' AI experience, I think there's plenty of room left for Alphabet to expand its artificial intelligence opportunities. The cherry on top for investors is that Alphabet stock has a price-to-earnings (P/E) ratio of just 28, far less expensive than the tech sector's average P/E of 41.
