There’s a bit of overlap between the world’s largest and second-largest companies, and it’s becoming a bit more striking over time. Indeed, Alphabet (NASDAQ:GOOG | GOOG Price Prediction), which just pulled the curtain on a slew of AI innovations at its I/O 2026 event, and GPU titan Nvidia (NASDAQ:NVDA), which just delivered another blockbuster result for its first quarter, are colossal firms that are racing ahead to increase their position in the great AI race.
Undoubtedly, Nvidia faced a high bar ahead of its Q1 results, and, in my opinion, pole-vaulted right over, with little issue. Still, the stock doesn’t tend to rally all that much anymore after such a magnificent showing. The same goes for Alphabet during its I/O events, regardless of what kind of profound technology is served up.
Chalk it up to sell-the-news, if you will, but the expectations game is becoming a bit tougher, especially at this point in the AI race, when investors are getting just a bit overexcited once again, especially when it comes to the semi names. In any case, Nvidia is sprinting ahead, and it’s not huffing or puffing, even though its stock might be running into a bit of a ceiling again, just shortly after it broke through its prior resistance level a few weeks ago.
What a quarter from Nvidia. Competitive threats might be a reason shares aren’t soaring
Whether the stock’s nearly 2% dip in response to a quarter sales surge 85% (that’s ridiculous for a company of Nvidia’s size), while its adjusted gross margins stayed close to its high watermark (around 75%). That’s some serious high-margin growth and real profitability that investors seem to be taking a raincheck on.
And, quite frankly, I don’t really understand the post-earnings reaction, which, I think, makes Nvidia stock a very compelling name to watch or buy, as it feels like many might be at risk of dumping real value for some of the more speculative names on the market that might face considerably more pain once the market sours on AI stocks again.
Any way you look at it, Nvidia is profiting profoundly from the AI data center boom. As other firms try to monetize while spending record sums on infrastructure, Nvidia is already bringing home obscene sums of cash. Looking to the second quarter, Nvidia is telegraphing another blockbuster result. With Vera Rubin looming, it feels like Nvidia, the company, just cannot lose, even if its stock does something else entirely.
It still feels like competitive pressures are the big hurdle stopping investors from scooping up Nvidia at these modest prices. A company like Alphabet surely stands out as a top rival that could feast on the gains to be had in AI chips with its seriously impressive TPUs, which are now in their eighth generation.
TPUs punch Google’s ticket into the world of selling AI chips to others
Google TPUs are becoming obscenely cost-effective enough to be disruptive to GPUs. And as Google looks to share its innovations with third parties while opening a new earnings stream, questions linger as to whether such an overlap with fellow AI chip giants, like Nvidia, will cause a substantial shift that results in margin and sales decay for the current leaders. Will the math still make sense once TPUs take off and a ton of firms line up for a piece of Google’s equally profound innovations?
Time will tell. Aside from the cost efficiencies of TPUs, I think Google has a chance to deliver a real shock if it can set a new floor on pricing.
Beckon to third parties with rock-bottom prices, and maybe some major share-taking can happen as Google looks to keep the walled garden nice enough to maintain a customer for life. But just because Nvidia is the leader doesn’t mean it will give up ground, even if new rivals challenge its pricing power.
Why? Its GPUs are at the frontier of raw firepower. Some firms want efficiency and cost savings. Others might be willing to spend more for the most explosive form of AI compute. I guess it all comes down to what a firm wants.
Are we talking about a power buyer in search of frontier-level innovation or a firm seeking efficiency? Even though the overlap between Alphabet is growing, I still think each firm can win in its respective corner within AI chips. In that regard, I think one has to own both stocks.
The bottom line
As Nvidia moves beyond chips to other layers of the AI stack, perhaps we’ll witness Nvidia going after some of Google’s target markets as well.
In other words, it’s playing offense and defense at the same time. Whether we’re talking about platforms (autonomous driving, world models, and applied AI), chips, or robotics, I think the overlap between the two titans will just keep growing.
