Alphabet has done something that would have sounded absurd not long ago: it briefly overtook Nvidia as the world’s most valuable company, thanks to a wave of optimism around Google Cloud, custom AI chips, and a fresh Anthropic deal worth about $200 billion. Nvidia finished Friday back on top, but the swing says plenty about where investors think the next AI profits may come from.
On the day of the move, Alphabet’s valuation climbed close to $4.8 trillion, while Nvidia sat around $5.2 trillion. That gap is still wide, but it has shrunk fast; last autumn Nvidia was around $4.9 trillion and Alphabet was below $3.4 trillion. In other words, the market has gone from treating Google as an AI also-ran to viewing it as a serious infrastructure play.
Anthropic’s cloud commitment lit the fuse
The immediate spark was Anthropic’s plan to spend about $200 billion on Google Cloud capacity, including access to computing infrastructure of up to 5 gigawatts. That is the kind of number that makes Wall Street sit up, grab a calculator, and reassess who actually sells the shovels in the AI gold rush.
It also shifted the investment story around Google itself. The company is no longer being priced only as a search-and-advertising giant with a chatbot problem; it is increasingly seen as a way to benefit from AI demand without being directly dependent on Nvidia’s GPU empire.
TPUs are becoming a real business
At the center of that re-rating are Google’s TPUs, the AI accelerators it originally built for internal use and is now selling through its cloud platform. Analysts at Mizuho say TPUs could add about $61 billion to Google Cloud’s order book by 2027, which is not the kind of number you park under a footnote.
This is the bigger strategic shift: Alphabet appears to control several layers of the AI stack at once, from models and consumer products to cloud infrastructure and custom silicon. Amazon and Microsoft have spent years pushing similar bundled-cloud narratives, but Google now has a fresher story because its chips, models, and distribution all plug into the same machine.
Google Search is no longer the market’s only worry
Not long ago, investors worried that generative AI would hollow out Google Search by sending users straight to chatbots instead of search results and ads. That fear has not disappeared, but Alphabet has partially defused it by adding AI features to Search and pushing Gemini into a much more competitive position among chatbots.
- Alphabet shares are up about 160% over the year.
- The stock’s P/E ratio is around 28 times expected earnings.
- Alphabet’s planned infrastructure spending could reach $190 billion this year, nearly double the 2025 level.
That spending spree is the part investors should watch most closely. A company can win credibility in AI very quickly; it can also burn through a lot of cash proving it deserves it. Alphabet’s next test comes at I/O, less than two weeks away, where the company will need to show how Gemini, AI agents, and monetization can turn all this enthusiasm into something sturdier than a headline-grabbing valuation spike.
The broader trade is clear enough: the AI boom is no longer just about chips, and it is no longer just about search. Nvidia still dominates AI accelerators, but Alphabet has suddenly become one of the market’s favorite ways to bet on the next phase of the buildout. The question now is whether the market is getting ahead of itself again, or whether Google really is turning infrastructure into its next profit engine.