Nvidia and Alphabet Positioned as AI Leaders with Profitability and Resources to Maintain Dominance
• Nvidia dominates the AI chip market with its graphics processing units (GPUs) and has high profit margins and free cash flow to invest in more innovation. The stock is reasonably valued relative to future growth prospects.
• Alphabet/Google is the leader in digital ads and searches, with user data and resources to advance its AI models. Investments in AI should benefit Google Cloud and advertising growth.
• Both companies are profitable and have tremendous financial resources to keep investing in AI, with Nvidia specifically poised to benefit from AI chip demand.
• Alphabet's stock valuation is relatively low at a forward P/E of 22, making it a safer AI investment as a core long-term holding.
• Nvidia beginning to ship a new GPU and growing government interest in AI could significantly extend its growth runway.