Alphabet at 15x forward earnings called biggest AI race winner

The article's argument sits against a backdrop of two clear AI winners: Nvidia, described as the world's No. 1 designer of graphics processing units (GPUs, high-powered chips driving key AI tasks like training and inference), and Micron, one of the top makers of memory and storage chips essential to AI. Their revenue soared in the triple digits, to $96 billion and $41 billion, and their shares advanced 900% and 1,300% respectively over five years. Alphabet, by contrast, is treated as a company whose role is broader: it develops the Gemini family of large language models and offers these and other AI products to Google Cloud customers, while also applying AI to its own search and advertising business.

The concern that has weighed on Alphabet's shares over recent months, according to the article, is the pace of AI spending, not weakness in its core business. Google ad revenue climbed 14% to $81 billion on $119 billion in total revenue, and Google Search holds more than 90% of the search market. The article reads the heavy infrastructure investment so far as necessary to serve current demand, and notes that AI market growth forecasts remain strong, while acknowledging some risk remains.

If the article's framing is right, the outcome for Alphabet hinges less on which chip designer or memory maker gains share and more on whether customers keep turning to AI at all. That would put the company in a different position from Nvidia and Micron, whose fortunes are tied to the products they sell into the build-out. Whether the ad business gets the AI lift the article expects, and whether spending concerns ease, is likely to be the test investors watch.