Why Google Is Dominating the AI Rally While Rivals Stumble

Alphabet’s Rerating Shows the Power of Owning the Full AI Stack

Tech stocks have faced a tough month, with the Nasdaq falling 6.6% by November 20 before rebounding 4% this week. One of the standout beneficiaries of this rebound has been Alphabet (NASDAQ: GOOGL), which continues to show stronger resilience than much of the broader tech sector. This strength does not come as a surprise. Back in July, we wrote that Google was the most undervalued company among the Magnificent Seven, supported by record growth in Google Cloud, expanding operating margins, and its growing advantage in vertical integration through its in-house TPU chips. These chips have allowed Google to enhance both the monetisation of its advertising business and the performance of its cloud services by offering more specialised computing power.

At the time, GOOGL was trading near US$180. Today, the stock sits around US$323, marking an impressive 80% gain over the past few months. In contrast, peers like Meta Platforms (NASDAQ: META) have seen double-digit declines as heavy capital expenditure spending weighs on margins and free cash flow, dampening investor enthusiasm around AI initiatives. Meanwhile, NVIDIA (NASDAQ: NVDA) is beginning to face rising competitive pressure. Still, it remains far more than a semiconductor story, which is the standard narrative by the broader market.

NVIDIA has evolved into a scalable ecosystem deeply embedded across the fastest-growing industries, from AI infrastructure to robotics. Its Omniverse platform is now shaping how machines learn through digital-world simulations, positioning the company at the forefront of the next wave of intelligent automation.

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Alphabet’s Ironwood Chip Pushes It to the World’s Number Three

Alphabet has now become the third most valuable company in the world, boasting a market capitalisation of around US$3.8 trillion. One of the recent catalysts driving this momentum was a report suggesting that Meta Platforms might look to adopt Google’s in-house TPU chips, opening the door for Google to commercialise its proprietary hardware.

The company’s Trillium chip, its sixth-generation TPU, already delivered a major leap forward, offering 4.7 times better performance and 67% greater energy efficiency than its predecessor. But its latest upgrade, known as Ironwood, takes that advancement to another level. Ironwood delivers more than 24 times the computing power of the world’s largest supercomputer, El Capitan, while being twice as energy efficient per watt compared to its trillium chip. This shows Google is effectively addressing one of AI’s biggest challenges: energy efficiency at scale.

Another defining feature of Ironwood is its massive increase in high-bandwidth memory (HBM). In simple terms, this allows the chip to store and process far more data at once. Ironwood contains 192 GB of ultra-fast HBM compared with only 32 GB in Trillium. This means the chip can handle larger AI models and datasets without constantly moving data back and forth, improving performance and reducing energy use.

Cloud Takes Off, and Even Berkshire Is Buying

In its latest quarter, Alphabet reported US$102 billion in revenue, with earnings per share up 35%, underscoring how efficiently the company is converting top-line growth into profitability and cash flow. Google Cloud was a standout, surging 34% to US$15 billion in revenue, backed by a US$155 billion backlog and accelerating enterprise demand for AI infrastructure. Riding this momentum, even Berkshire Hathaway took notice, quietly building a position in Google, a strong signal of confidence in the company’s long-term value creation.

The Investors Takeaway for Google

While this article leans toward the optimistic side, Alphabet looks far less attractive from a valuation standpoint. Much of the optimism now appears priced into the stock, which is not to say it cannot move higher, but the margin for error is narrowing. A large portion of Google’s revenue still comes from advertising, leaving it exposed to cyclical ad spending and broader economic shifts. At the same time, competition in cloud computing continues to intensify, with major players like Amazon and Microsoft expanding aggressively.

We remain constructive on Alphabet’s long-term outlook because of its strong fundamentals, deep financial resources, and proven ability to execute across multiple business lines. However, investors should not overlook the underlying risks. The upside could still be significant, but the path forward will require precise execution, disciplined capital allocation, and close attention to regulatory and competitive pressures that could reshape the landscape.