Only about a dozen companies have ever reached a $1 trillion valuation. Only one has gotten to $5 trillion: Nvidia (NVDA 2.09%). The chipmaker is in a league of its own and currently holds the title of the world's largest corporation. But some of its tech peers aren't that far behind. The closest to Nvidia is Alphabet (GOOG +1.00%) (GOOGL +0.88%), whose market cap is currently $4.8 trillion, compared to Nvidia's $5.5 trillion. What's more, the Google parent company has significantly outperformed Nvidia over the past year. Could Alphabet overtake Nvidia as the world's biggest company by the end of 2026?
Image source: The Motley Fool.
Alphabet's strong momentum
Alphabet is seeing incredible demand for its cloud services. During the first quarter, the company's total revenue increased by 22% year over year to $109.9 billion. Alphabet's advertising segment remains the largest, but cloud sales grew by an outstanding 63% year over year to about $20 billion. Alphabet's cloud operating income climbed even faster, by 203% year over year to $6.6 billion, while the company's total operating income grew by a much more modest 30% year over year to $39.7 billion.
That's impressive for a segment that, for a long time, wasn't even profitable. Alphabet credited strong demand for artificial intelligence (AI) products for the performance of its high-flying cloud division, and the company is doubling down. It plans to invest even more in capex in 2027 to keep up with rising demand for cloud-related services, as evidenced by the company's backlog almost doubling quarter over quarter to $460 billion.
Alphabet's quarterly update once again highlighted its incredible long-term opportunities, especially in cloud computing and AI. If it can continue posting strong financial results, the stock might maintain the momentum we have seen recently through the end of the year and perhaps well beyond.
NASDAQ: GOOGL
Key Data Points
Bullish signs from Nvidia
Ironically, Alphabet's strong cloud performance and increased capex spending spell good news for Nvidia. It suggests the demand for its AI chips, which remain the market leaders, could accelerate. The company has pointed this out on numerous occasions. Nvidia's CEO, Jensen Huang, famously projected $1 trillion in purchase orders for its Vera Rubin and Blackwell platforms through 2027. Here are two reasons why this guidance is significant. First, it only concerns these two AI systems, Blackwell and Vera Rubin. Huang wasn't talking about anything else.
Second, Vera Rubin will only be broadly available starting in the second half of the year. Yet, customers may already be lining up for it. That speaks volumes about where Nvidia could be headed over the next seven months. Some might argue that the company's success is already baked into its share price. My view is that it isn't the case. Nvidia's 26.5 forward price-to-earnings ratio is not that much higher than the 24.4 average for information technology stocks.
At these levels, and given that AI remains a major tailwind, Nvidia could continue to perform well.
NASDAQ: NVDA
Key Data Points
Nvidia should keep the top spot
Alphabet isn't the only company that's not too far from catching Nvidia. For instance, Apple has a market cap of $4.4 trillion. Still, Nvidia has a head start in the race to be the "world's largest company by the end of 2026." It's not an insurmountable one, but it is meaningful enough.
If it can more or less match the performance of its closest peers through the end of 2026, it will keep its crown. My view is that Nvidia is capable of doing that, given the continued rapid adoption of AI services and growing demand for computing power to run inference models and agentic AI. That said, both Nvidia and Alphabet are excellent stocks to buy and hold. They are leaders in their respective niches, boast wide economic moats, and have demonstrated strong innovative capabilities throughout their histories.
They also generate plenty of cash to pour into R&D and remain top players in their markets. Regardless of which ends up as the largest company by year-end, these are great buy-and-forget options.
