Nvidia (NVDA 0.93%) has been the best-performing artificial intelligence (AI) infrastructure stock over the past decade, which has propelled it to become the largest company in the world. The chipmaker has grown to its current size because its graphics processing units (GPUs) are the primary chips used to train AI models. More recently, the company has been trying to position itself better for the inference market with its acquisition of Groq, which makes chips designed specifically for this task, as well as for agentic AI with its push into data center central processing units (CPUs).
However, if there is one AI stock I think could become bigger than Nvidia over the next decade, it's Alphabet (GOOGL 0.33%) (GOOG 0.36%).
NASDAQ: GOOGL
Key Data Points
The complete AI player
The one big long-term advantage that Alphabet has over Nvidia is that it is a complete AI company. It all starts with its custom AI accelerators, Tensor Processing Units (TPUs). This is where the company most directly competes against Nvidia. TPUs are chips designed for specific AI tasks and, as such, tend to have higher performance and consume less power than more general-purpose chips. Alphabet has designed all its software and hardware around these chips to help optimize their performance.
It uses its TPUs to train and run inference with its own AI models, which saves it money. It also offers its cloud computing customers the option to use its TPUs for their own training and inference needs, which means lower prices for its customers and higher margins for itself. It is also just starting to let select customers, such as Anthropic, begin to purchase them outside of Google Cloud. Overall, Alphabet's TPUs both give it a big cost advantage over competitors that rely mostly on Nvidia's chips and provide it with a high-margin revenue stream.
Image source: Getty Images.
By having its own top-tier AI models, Alphabet is also able to capture more of the enterprise AI revenue pie within Google Cloud. On top of that, the company is dominating the consumer AI market because it is able to incorporate its Gemini models into its well-established product ecosystem, including Google Search, to drive growth. It also has a world-class ad network that lets it monetize its AI model in the consumer space better than competitors. Alphabet also has a big distribution edge through its ownership of the world's top smartphone operating system and web growth, which, together with a search revenue-sharing deal with Apple, essentially makes Google the gateway to the internet for most people in the world.
With control over so many parts of the AI ecosystem, Alphabet should become bigger than Nvidia over the next decade.
