Which AI Stock Is Best?

If you follow the market’s biggest winners, you already know Alphabet and NVIDIA sit at the center of the AI boom. But despite being lumped together as “AI beneficiaries,” the two companies couldn’t be more different. One is a diversified digital empire with unmatched cash flow. The other is the indispensable hardware supplier powering the AI build-out.

Key Points

• Alphabet offers safer AI exposure. Strong cash flow, search dominance, and buybacks provide steady growth at a more reasonable valuation.

• NVIDIA has unmatched growth but higher risk. Its AI chip leadership drives explosive earnings, but the stock’s premium makes it vulnerable to any AI slowdown.

• Alphabet is the better balanced buy. It captures AI upside with far less volatility than NVIDIA.

Alphabet Is The Steady AI Superpower

Alphabet’s custom TPU chips, first introduced in 2016, help explain why Google can train models at a scale competitors struggle to match. Management has already signaled that capital spending will accelerate sharply in 2025 as it modernizes its global data centers for AI-driven products across Search, Assistant, Android, and YouTube.

And despite years of predictions that chatbots would disrupt Google Search, usage data shows the opposite that Google still commands close to 90% global search share, and Search revenue grew double digits last quarter. User behavior remains far stickier than many expected.

Financially, Alphabet is built for durability. It produced more than $73 billion in free cash flow over the past 12 months, with net margins and ROIC above 30%. The company has also become a buyback engine—over $40 billion so far this year, reducing its share count and setting up stronger long-term EPS growth.

Valuation is another advantage. At over 30× earnings, Alphabet looks inexpensive relative to the Magnificent Seven. Analysts see modest near-term downside, but still expect EPS to grow more than 15% annually over the next several years, before accounting for the compounding effect of buybacks.

NVIDIA Is Explosive Growth But Higher Stakes

NVIDIA’s transformation from “gaming chip maker” to “AI infrastructure king” is one of the most dramatic corporate pivots in modern tech.

Analysts expect NVIDIA’s EPS to compound more than 37% annually for five years, over twice Alphabet’s pace. NVIDIA itself guided for $65 billion in Q4 revenue, up from Q3’s record just shy of $58 billion.

Driving this is an unprecedented wave of data-center spending. Industry estimates suggest cumulative global AI-related data-center capex could reach $4 trillion by 2030. NVIDIA’s dominance in AI compute makes it the clearest beneficiary.

But the risks are real. The stock trades at nearly 60× operating cash flow, valuation levels that demand near-flawless execution. Shares have stalled in recent months even as Alphabet has surged, a sign the market may be questioning how much AI enthusiasm is already priced in. And because NVIDIA is essentially a pure-play AI proxy, any cooling in AI sentiment—or even a pause in hyperscaler spending—could hit the stock hard.

Which Stock Is the Better Buy?

Both companies are exceptional, and both stand to benefit meaningfully from the AI build-out. The difference comes down to valuation, durability, and how much uncertainty you’re willing to accept.

NVIDIA offers the higher growth but also the higher risk. The company sits at the epicenter of AI demand, but its valuation assumes continued hyperscaler spending at an aggressive pace.

For most investors, Alphabet may be the more balanced choice right now. It may not match NVIDIA’s growth rate, but it offers substantial long-term compounding with a lower risk profile—and still captures the upside of the broader AI cycle.