How Serious Is Alphabet’s Threat to Nvidia?
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Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) and NVIDIA (NASDAQ:NVDA) reported summer quarters showing the same AI boom from opposite sides. Google Cloud revenue grew 82% as Alphabet built out its TPU-powered stack. NVIDIA’s revenue rose 105.8% on demand from hyperscalers. Alphabet still buys NVIDIA systems while moving toward cheaper, more application-specific chips.
Google Cloud Surges While NVIDIA Sells Whole AI Factories
Google Cloud brought in $24.77B, driven by enterprise AI infrastructure. Sundar Pichai said Alphabet’s “differentiated, full stack approach to AI is delivering real, measurable value.” Gemini processes 22 billion API tokens per minute, and Google can route that work to its own chips.
Free cash flow came in at negative $5.86B, and Alphabet suspended buybacks.
The Data Center segment at NVIDIA reached $89.02B, and networking grew 138%. Customers are buying complete systems. Jensen Huang said: “Now, compute is revenue.”
| Business Driver | Alphabet | NVIDIA |
|---|---|---|
| AI Chip Approach | In-house TPUs plus NVIDIA GPUs | Vera Rubin, Vera CPU, CUDA |
| Q2 Capex | $44.92B | $2.68B |
| Q2 Free Cash Flow | -$5.86B | $21.34B |
How Much Google Really Matters to NVIDIA
NVIDIA does not report Google’s share of sales. Google sits inside a hyperscale category worth $49 billion, which grew 13% sequentially. Revenue from neoclouds, enterprises and government buyers reached $40 billion, and management expects non-hyperscalers to make up roughly half of the data center business.
Huang said many XPUs “are inference-specific chips for one cloud or one service.” That argument works less well against Google, which has the models, cloud and workloads.
Margins and Backlog Will Expose Any TPU Damage
Watch NVIDIA’s gross margin, which management expects to bottom at 71% to 72% in Q4. If TPUs pull prices down, the margin line will show it first. Google Cloud’s backlog was over $460 billion after Q1. Google just launched Gemini 4 Argon, giving TPU capacity another major workload.
Why I Rate Alphabet’s Threat as Real but Slow-Moving
NVIDIA’s outlook for about 70% fiscal 2028 growth is “supply-constrained.” As long as supply stays tight, TPUs Google uses can free up NVIDIA GPU supply for other buyers. Alphabet limits how far NVIDIA can grow later more than it threatens today’s sales.
NVIDIA generates far stronger cash flow, though its shares get 46 times earnings. Alphabet is priced at 15 times earnings while carrying heavy spending as the challenger.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
