Investors should always view forecasts with skepticism. But Nvidia and Alphabet are undoubtedly big players in the fast-growing artificial intelligence market, so both stocks deserve further consideration. Here are the important details.
Nvidia graphics processing units (GPUs) are the gold standard in accelerated computing, a discipline that uses specialized hardware and software to accelerate complex data center workloads such as artificial intelligence (AI). Nvidia GPUs are not only the fastest accelerators on the market, but are also supported by a more robust suite of software development tools.
As a result, the company is responsible for 98% of GPU shipments in data centers and has a market share of more than 80% in AI chips. Nvidia has further strengthened its leadership in accelerated computing with new hardware products such as the Grace CPU and networking solutions. Nvidia is even the market leader in AI networking.
Nvidia reported strong financial results in the second quarter of fiscal 2025 (ending July 2024). Revenue rose 122% to $30 billion and non-GAAP earnings rose 152% to $0.68 per diluted share. In the short term, Nvidia has a major catalyst in the upcoming launch of its next-generation Blackwell GPU, a chip that has been sold out for 12 months.
In addition, Nvidia sees a growing opportunity in humanoid robots and physical AI. To explain, while generative AI can create text and images, physical AI can understand, navigate, and interact with the physical world. Straits Research estimates that the humanoid robot market will grow 34% annually through 2032, and Nvidia is well positioned to benefit.
The company sells products that address every layer of the robotics computing stack: the DGX systems provide supercomputing infrastructure for training models, the Isaac platform provides development tools for building and testing robotics applications, and the Jetson embedded systems provide the built-in computing power robots have to make a decision.
Wall Street expects Nvidia’s revenues to grow 35% annually over the next three years. That makes the current valuation of 63.5 times earnings reasonable. I’m skeptical about the market cap reaching $10 trillion by 2030, but patient investors should still feel comfortable buying a small position today.
Alphabet subsidiary Google is the largest digital advertiser and the third largest public cloud, and the company is using AI to strengthen its position in both markets. For example, its leadership in advertising is due in large part to its dominance in Internet search. That’s why Alphabet added generative AI summaries to Google Search to improve the experience. It’s still early, but CEO Sundar Pichai says usage and satisfaction are trending upward.
Similarly, Alphabet introduced more than 500 updates to its machine learning (ML) platform Vertex AI last year, including the ability to develop generative AI applications with its Gemini models. Forrester research And Gartner have since recognized Google as a leader in AI/ML platforms, a notable distinction considering that IDC analysts expect AI/ML platforms to be the fastest growing subcategory of cloud services through 2028.
Google accounted for 13% of spending on public cloud infrastructure and platform services in the third quarter Amazon And Microsoft 31% and 20% respectively. However, Google has gained 2 percentage points of market share over the past year, and Forrester analyst Mike Gualtieri says the company is “the best-positioned hyperscaler for AI.” That portends further stock gains in the future.
Alphabet reported encouraging financial results in the third quarter. Revenue rose 15% to $88.2 billion thanks to particularly strong momentum in the cloud computing segment, coupled with modest growth in Google Search and YouTube advertising. Meanwhile, the company’s operating margin rose 4 percentage points and GAAP earnings rose 37% to $2.12 per diluted share.
In the future, Alphabet has great opportunities in its autonomous driving subsidiary Waymo. The company already provides more than 100,000 fully autonomous rides per week across Phoenix, San Francisco and Los Angeles, and will expand in Austin and Atlanta in 2025. Bank of America Analyst Justin Post estimates Waymo’s revenue could reach $75 million this year, but sees a longer-term opportunity of $144 billion.
Looking ahead, Wall Street expects Alphabet’s profits to rise 16% annually over the next three years. That consensus estimate makes the current valuation of 23 times earnings seem quite reasonable. Similar to my comments on Nvidia, I am cautiously optimistic that Alphabet will reach $500 per share by 2030. But patient investors should feel comfortable buying a position in this stock today, even if that doesn’t happen.
Consider the following before buying shares in Nvidia:
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Jennevine has positions at Amazon and Nvidia. The Motley Fool holds positions in and recommends Alphabet, Amazon, Bank of America, Microsoft and Nvidia. The Motley Fool recommends Gartner and recommends the following options: long calls in January 2026 for $395 at Microsoft and short calls in January 2026 for $405 at Microsoft. The Motley Fool has a disclosure policy.
2 Brilliant Artificial Intelligence (AI) Stocks to Buy Before They Soar 190% and 200%, According to Select Wall Street Analysts was originally published by The Motley Fool
