Nvidia’s dominance in the AI chip market may be coming to an end. Alphabet’s new Gemini 3 AI model, which was launched on November 18 and quickly recognized as one of the best in the industry, was trained exclusively on Alphabet’s specially designed tensor processing units (TPUs) for data centers. This marks a significant shift towards TPU adoption by leading tech companies.
Meta Platforms is now reportedly in talks to buy TPUs directly from Alphabet, while Anthropic plans to expand its adoption of these chips through Google Cloud. These developments indicate that the industry may be moving away from Nvidia’s graphics processing units (GPUs) and towards Alphabet’s TPUs for AI workloads.
Nvidia still has a strong position due to its dominant full-stack ecosystem featuring proprietary CUDA software, which is widely used by top developers. However, the company faces significant competition as cloud providers like Alphabet continue to grow their orders for TPU-based computing capacity. Nvidia CEO Jensen Huang forecasts that AI data center spending could reach $4 trillion annually by 2030.
Despite this, Nvidia’s stock price is currently trading at an attractive valuation relative to its history, with a P/E ratio of 44.6. This makes it a potential buy for investors willing to hold onto it for the next five years. Meanwhile, Alphabet stock is also undervalued, with a P/E ratio of 31.2.
It’s worth considering owning shares in both companies as AI infrastructure spending is expected to continue ramping up.
Source: https://www.fool.com/investing/2025/12/03/alphabet-delivered-bad-news-nvidia-stock-investors