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(Bloomberg) — A rally in Alphabet Inc. shares is poised to shake up the ranking of the world\u2019s most valuable companies, amid signs the search giant is making headway in efforts to rival Nvidia Corp.\u2019s bestselling AI accelerator. <\/p>\n
That\u2019s prompting investors to reassess the technology landscape and the potential changes in stock market leadership, as rave reviews for Alphabet\u2019s new Gemini artificial intelligence model and demand for AI chips pushes its shares higher.<\/p>\n
Most Read from Bloomberg<\/p>\n
Shares in the Mountain View, California-based firm rallied 2% to hit a $3.9 trillion market value. Its 37% rally since mid-October has added about $1 trillion in value over that time. Gains this year have left the Google parent about $300 billion away from Nvidia\u2019s $4.2 trillion market cap.<\/p>\n
Meta Platforms Inc. is in discussions to use Google chips \u2014 known as tensor processing units, or TPUs \u2014 in data centers in 2027, The Information reported, citing an unidentified person familiar with the talks. Meta also may rent chips from Google\u2019s cloud division next year, the news outlet said.<\/p>\n
\u201cNvidia is expected to have phenomenal growth and now it will be very natural to see a market that is much more wary of competition,\u201d said Alexandra Morris, an investment director at Skagen AS. \u201cThe narrative that Nvidia is the only one that will provide chips to this buildup of data centers \u2014 that narrative has changed.\u201d<\/p>\n
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An agreement with Meta would help establish TPUs as an alternative to Nvidia\u2019s chips, the gold standard for big tech firms and startups from Meta to OpenAI that need computing power to develop and run AI models.<\/p>\n
Nvidia slipped 5.1%, while shares in smaller-rival Advanced Micro Devices Inc., which also makes AI chips, fell 7.8%.<\/p>\n
WATCH: Meta Platforms Inc. is reported to be in talks to spend billions on Google\u2019s AI chips in data centers in 2027. Tom Mackenzie reports.Source: Bloomberg <\/p>\n
Nvidia\u2019s valuations have pulled back, trading at 26 times forward earnings, well below its average over the past decade of 35 times. Alphabet\u2019s has shot up to trade at 27 times forward earnings compared to an average of 20 times.<\/p>\n
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While a possible deal with Meta \u2014 one of the biggest spenders globally on data centers and AI development \u2014 draws attention to the potential for long-term challenges to Nvidia\u2019s dominant market position, much depends on whether the tensor chips can demonstrate the power efficiency and computing muscle necessary to become a viable option in the long run.<\/p>\n
This frenzy is causing Alphabet stock\u2019s 14-day relative strength index to about 75, over the level of 70 that signals to some technical analysts that a stock is overbought. <\/p>\n
While Miller Tabak + Co., LLC. Chief Market Strategist Matthew Maley says Alphabet could take \u201cthe leadership role for the AI industry going forward,\u201d he points out that the stock is now getting \u201cmore than just a little bit overbought.\u201d<\/p>\n
\u201cSo, it could be due for a pullback at some point before too long,\u201d said Maley.<\/p>\n
–With assistance from Neil Campling, Nick Turner and Farah Elbahrawy.<\/p>\n
(Updates stock moves throughout, chart and adds commentary.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — A rally in Alphabet Inc. shares is poised to shake up the ranking of the world\u2019s…\n","protected":false},"author":3,"featured_media":403936,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[11733,3638,8296,51,50,1671,2437,52],"class_list":{"0":"post-403935","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"tag-alphabet-inc","9":"tag-bloomberg","10":"tag-data-centers","11":"tag-headlines","12":"tag-news","13":"tag-nvidia","14":"tag-stock-market","15":"tag-top-stories"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115611217693119781","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/403935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=403935"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/403935\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/403936"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=403935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=403935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=403935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}