Will Alphabet Inc. Class C (GOOGL.US) shake up NVIDIA Corporation (NVDA.US) in the AI chip throne? Wall Street refutes the shortsighted "zero-sum game" theory, saying the trillion-dollar market can accommodate more players.

When the market reacted to rumors of Meta (META.US) intending to acquire Alphabet Inc. Class C (GOOGL.US) TPU causing a drop in NVIDIA Corporation (NVDA.US) stock price, analysts are using the "zero-sum game fallacy" to describe this overreaction. Most analysts believe that in the trillion-dollar AI infrastructure race, Alphabet Inc. Class C and chip giants like NVIDIA Corporation have the potential to achieve mutual success. Market cognitive bias Alphabet Inc. Class C DeepMind research scientist Amir Yazdan wrote on X platform: "This sell-off fully exposes the market's shallow understanding of hardware and demand." According to his LinkedIn profile, he joined Alphabet Inc. Class C in mid-2018. Yazdan later clarified in follow-up tweets that the demand for AI in the field is very strong, but he did not participate in the chip design work of Alphabet Inc. Class C TPU. NVIDIA Corporation refuted rumors that Alphabet Inc. Class C would disrupt its dominant position in AI chips through its official X account, stating that this claim was unfounded. While acknowledging the achievements of Alphabet Inc. Class C in the AI field, NVIDIA Corporation emphasized that it is still providing products to Alphabet Inc. Class C and pointed out, "NVIDIA Corporation leads the industry we are the only platform capable of running all AI models and supporting full-scenario computing." The debate between NVIDIA Corporation's AI chips and Alphabet Inc. Class C TPU stems from an earlier report. The report stated that companies like Meta are evaluating the use of Alphabet Inc. Class C TPU in data centers. Prior to this, Alphabet Inc. Class C primarily used TPU internally and rented it out to enterprises running large-scale AI workloads in its cloud data centers. Analyst viewpoints clash In the eyes of many Wall Street analysts, NVIDIA Corporation remains the undisputed king in the field of AI chips. Bank of America Corp analyst Vivek Arya delved into this topic in a report, stating that internally developed TPU chips may not pose a significant competitive threat to NVIDIA Corporation. Arya pointed out that NVIDIA Corporation's AI chips are "ubiquitous on all major cloud platforms, involved in nearly all large language models (LLMs)," and have "the fastest time to market and best efficiency ratio." Daniel Newman from Futurum Group bluntly stated, "The pointless debate about GPU/TPU perfectly illustrates the fallacy of zero-sum thinking. The AI infrastructure market size is expected to reach tens of trillions of dollars, and Alphabet Inc. Class C, NVIDIA Corporation, and AMD (AMD.US) can all achieve mutual success." He also predicted that with this huge market opportunity, other companies such as Amazon.com, Inc. (AMZN.US) and Qualcomm (QCOM.US) will also reap billions of dollars in revenue from the AI chip business. This sharply contrasts with the view expressed by Alphabet Inc. Class C executives that the proliferation of TPU would lead to a 10% decrease in NVIDIA Corporation's annual revenue. Wedbush similarly believes that in the coming years, tens of trillions of dollars will be invested in this field, and many tech giants besides NVIDIA Corporation in the chip industry will benefit. An analyst team led by Daniel Ives added, "But this should not be misunderstood as NVIDIA Corporation's unwavering position as the deserving champion of the AI revolution being challenged in the chip field, this dominant position will not change in the short term." The analyst said, "The TPU chip jointly developed by Alphabet Inc. Class C and important partner Broadcom Inc. (AVGO.US) has made a prominent appearance in the AI market and is showing clear growth momentum, which is undoubtedly a positive development... As AMD has recently achieved success, we will see more tech giants joining the AI chip competition in pursuit of commercial opportunities in this fourth industrial revolution. However, it should be clear that NVIDIA Corporation is always at the core of the AI revolution, and this situation will not change in the next few years." Vijay Rakesh, an analyst at Mizuho Securities, also expressed strong support for NVIDIA Corporation, stating that this chip giant has a highly diversified customer base, covering cloud service providers, enterprise customers, and a new sovereign agreement reached in the Middle East through partnerships with OpenAI and CoreWeave (CRWV.US) (partners include Humain and Neoclouds). The analyst added that NVIDIA Corporation's competitive advantage in the AI hardware and software field is rooted in its CUDA platform, which sets a high barrier to entry for competitors. However, some analysts mentioned that Alphabet Inc. Class C announced last month to supply up to one million TPU chips to Anthropic, highlighting the long-term challenges to NVIDIA Corporation's dominant position. Gary Black from Future Fund believes that currently, NVIDIA Corporation's chips are still the gold standard for developing and running AI platforms for tech giants and startups (from Meta to OpenAI), but the potential cooperation between Alphabet Inc. Class C and Meta may push TPU to become an alternative choice to NVIDIA Corporation's chips. Divergent stock performance In recent times, Alphabet Inc. Class C's stock has surged, with a cumulative increase of 15% since November and a whopping 71% increase so far this year, making it the best-performing stock among the "big seven" in 2025. In contrast, NVIDIA Corporation's stock price has fallen by 12% this month, with a narrower year-to-date gain of 32%, mainly influenced by concerns about an AI bubble, accounting operation doubts, and competition pressure in the AI chip market. Wedbush's Ives noted that tech stocks are currently in a period of consolidation after a sustained uptrend: although NVIDIA Corporation reported strong growth data far exceeding market expectations last week, its stock price fell the next day and has since been trading sideways, with the latest news of Alphabet Inc. Class C TPU adding additional pressure on the stock price. The Ives team interpreted this as exacerbating market concerns, with bearish sentiments about an "AI bubble" amplifying, along with concerns about limited revenue from China, doubts about OpenAI's "too big to fail" status, and controversies surrounding cyclic financing... Combined with the chain of events triggered by Michael Burry's short selling, market anxiety has intensified. However, the firm believes this is just a short-term adjustment for tech stocks. They expect tech stocks to regain momentum in the remaining months of the year as investors actively position themselves for the "AI revolution and its second, third, and fourth-order derivative opportunities, with these impacts beginning to penetrate the consumer and enterprise markets." The Ives team concluded, "This is an AI arms race, and the continuous investment of tech giants is the key driving force for the next phase of growth. NVIDIA Corporation's strong quarterly performance, performance guidance, and high-level statements, as a core part of the AI industry puzzle, indicate that this investment frenzy will last at least until 2026 with no signs of slowing down."