MW Google is crushing it. Why that's worrying investors in Nvidia and other AI stocks.

By Britney Nguyen

Alphabet's 'AI comeback' could be concerning for other AI players in part because the company is leveraging its own custom chips

Alphabet is making an "AI comeback" that could see it winning the AI race in the long term, a Melius analyst says.

A stellar earnings report from Nvidia wasn't enough to override growing concerns about the sustainability of hyperscaler spending and circular industry deals.

But one analyst thinks investors only have "one real reason for worry," and that's the rapid rise of Alphabet $(GOOG)$ $(GOOGL)$ in artificial intelligence.

The Google parent has made an "AI comeback," according to Melius analyst Ben Reitzes, and that's led some investors to be "petrified that Alphabet will win the AI war" with its improved Gemini AI models and in-house tensor processing units, or TPUs.

If Alphabet ends up being a winner, Reitzes said that it "would actually hurt several stocks" that he covers, so he's warning investors to "prepare for volatility."

Alphabet is a threat because it "is the most vertically integrated hyperscaler," Reitzes said, pointing to its TPUs and custom networking. The company "has the only team really capable of taking more of its chip design in-house and push its own custom optical circuit switches," he added.

See more: Google wins high praise for its chip efforts - and that can help Broadcom's stock too

Having success with its chips makes Alphabet less likely to turn to Nvidia (NVDA), Advanced Micro Devices $(AMD)$ and Arista Networks (ANET) in the long term, Reitzes said. And he sees Google gaining AI workloads with Gemini, which would negatively impact Microsoft $(MSFT)$, Amazon.com (AMZN) and Oracle $(ORCL)$.

Elsewhere on Wall Street, there have been concerns that if Alphabet beats out OpenAI, it could threaten the ChatGPT maker's ability to follow through on financial commitments made across the AI landscape.

While Reitzes admits that it's still "a bit early" to determine whether or not Alphabet will be an AI winner in the long term, "semis and hyperscaler companies (especially Oracle), need to wake up to the fact that the 'Alphabet issue' is a concern and we need much more transparency around deals with OpenAI and other customers to gain more comfort," he said in a Monday note.

Read: The AI trade increasingly hinges on OpenAI - and that's a big risk for the entire market

Reitzes named Apple $(AAPL)$, IBM $(IBM)$ and Cisco $(CSCO)$ as other buy-rated stocks under his coverage that have "defensive characteristics" against ongoing volatility in the AI trade. He also noted that Google's recently released Gemini 3, which outperformed OpenAI's ChatGPT 5.1 and Anthropic's Claude Sonnet 4.5 in tasks such as academic and scientific reasoning, gives him pause on Adobe $(ADBE)$, which he has a sell rating on.

Alphabet's stock has been the best performer among the "Magnificent Seven" since the start of November, and it could be on its way to being the group's best annual performer for the first time in the company's history.

See more: Alphabet's stunning stock surge this year could fuel this never-before-seen feat

"Increased users for Gemini could even cause Meta to eventually cry uncle, causing Mark Zuckerberg to give up on his massive spending push on open models," Reitzes said, noting that capital expenditures at the social media giant $(META)$ could amount to $113 billion in 2026, which would be up 60% from this year.

Enthusiasm for Gemini is giving some investors "fear that OpenAI is this generation's AOL," Reitzes said. But while Google's rise could make it more difficult for OpenAI to raise money or prompt hyperscalers to reevaluate their AI spending, Reitzes said the top cloud providers have raised capex estimates and could together spend nearly $500 billion next year. And the companies have the cash flow to do so.

Alphabet's offerings have improved, Reitzes said, but the AI trade "will still take a while to play out, and it could end up that AI is not "a zero-sum game."

Don't miss: Why the once-invincible Nvidia can't save the AI trade

-Britney Nguyen

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November 24, 2025 09:19 ET (14:19 GMT)

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