AI Stocks Wobble as Google, Nvidia Competition Steps Up

Tech stocks have resumed their upward trend after last week's wobble, but some leaders are still suffering as they face intense competition from big names trying to seize pole position in the AI race.

Biggest AI Names Monthly Performance

• Alphabet (GOOG) $3.91 trillion, +24.2%
• Apple (AAPL) $4.11 trillion, +5.4%
• Nvidia (NVDA) $4.32 trillion, -4.5%
• Microsoft (MSFT) $3.55 trillion, -8.9%
• Meta Platforms (META) $1.60 trillion, -13.9%

Is AI King Losing Its Crown?

The demand for AI chips amid the recent tech surge has pushed Nvidia to the top of the valuation charts, fighting Microsoft for the top spot. But the latter has fallen behind, and there are now two other companies close behind Nvidia's market size: Apple and Alphabet. After Nvidia's earnings failed to provide sustained upside, the two upstart companies are closing in on the top spot. Recovery in iPhone sales has allowed Apple to resume its leading position in the tech world, but the Google parent's gains are seen as directly related to its catch-up in the AI arms race. The release of Gemini 3 earlier this month is viewed by analysts as a disruptive moment in the AI landscape, potentially challenging Microsoft's ChatGPT 5, released earlier in the year. Alphabet's AI tool has topped benchmarks for coding, maths, science, and multimodal reasoning, helping power the company's share price higher. Gemini 3 has received praise in Silicon Valley, notably from Salesforce CEO Mark Benioff, who compared it to ChatGPT, and from Google, which received an investment from Berkshire Hathaway.

Alphabet is one of the leading vertically integrated tech firms, posing a threat to Nvidia's chip dominance through its own chip development alongside Broadcom. The success of Gemini could prove a threat not just to the top chipmaker but also to its design partners, such as ARM. Intel and AMD, who have struggled to gain ground in the AI sphere, could be left further behind. Nvidia took a further hit on Tuesday after Meta announced it would use Google AI chips to build out its data centres. By providing the full suite of AI infrastructure, including both chips and cloud services, Alphabet is posing a serious challenge to AI leaders.

Can Nvidia Still Stay Ahead?

Not all analysts agree that Nvidia is under threat, and notably, CNBC's Jim Cramer argues that the recent selloff in the company's shares is overblown. After all, Nvidia posted solid returns just a week ago, indicating strong demand for its latest chips. But part of the issue could be strong demand, as Nvidia is still struggling to fulfil orders, leading companies like Meta to look for alternatives, such as Google, which is bolstering competition. AI infrastructure companies have expressed concerns that they may be overly reliant on Nvidia and are looking to diversify their chip supply. This could provide an opportunity to broaden AI gains, with other smaller companies potentially disrupting the space.

Alphabet in Post-Pennant Environment

Nvidia is far from record highs, while Alphabet is bursting through new levels near $330 per share after breaking outside a pennant pattern, continuing its parabolic move. However, with RSI overbought and showing double divergence, the measured-move projection overachieved, and a doji candlestick formed on Tuesday, the stock is at risk of a reversal towards the $300 handle. Losing the round level would open the door to $270, the pennant low, with further drops exposing $255. On the other hand, if the VWAP extremes continue to expand directionally, GOOG might eye $350 next.

Source: SpreadEx | Alphabet C