With a year-to-date gain of 26%, Alphabet (GOOG) (GOOGL) is the best-performing Magnificent 7 stock. The Google parent was the best-performing constituent of the coveted group last year and has continued its good run in 2026 as well.
Meanwhile, thanks to the recent rally, the stock is now approaching $400 levels. Moreover, it is on the verge of becoming the next $5 trillion company. No other company apart from Nvidia (NVDA) has achieved that feat. Notably, artificial intelligence (AI) has redefined the market cap pecking order among Big Tech companies, and companies such as Meta Platforms (META) and Microsoft (MSFT), which have failed to justify their burgeoning capex, have fallen out of favor with investors.
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Until about a few months back, Nvidia was the predominant AI play as its chips were the basic building block for the massive data centers that Big Tech companies are building. However, Alphabet has been the market’s latest AI darling as it is not only witnessing impressive monetization of its capex but is now looking to compete with Nvidia by offering its own chips to third-party customers.
Alphabet’s Cloud Backlog Doubled in Q1 2026
While Alphabet does not provide standalone numbers for its tensor processing unit (TPU) and graphics processing units (GPUs), during the Q1 2026 earnings call, it said that its chips are part of the $462 billion cloud backlog, which incidentally doubled in the quarter. Moreover, Alphabet’s cloud revenues rose 63% year-over-year in Q1, and the segment’s quarterly sales topped $20 billion for the first time. The company has been gaining cloud market share from Amazon Web Services (AWS) (AMZN) and Microsoft Azure, which grew at a much slower pace in Q1.
TPUs Could Be a Key Revenue Driver for Alphabet
Alphabet expects to “begin to deliver TPUs to a select group of customers in their own data centers.” It expects some revenues from these deals later this year, but the bulk of the revenues from the current deals will flow in 2027. Citizens JMP, which has a “Market Outperform” rating on GOOG, expects TPU sales to reach about $3 billion in 2026 while projecting them to rise to $25 billion in 2027.
