Alphabet is surging on notion it’s winning AI race over OpenAI. Why that’s scaring many investors
Alphabet ‘s recent move into the spotlight on artificial intelligence has sent its shares jumping while other major technology names flounder. Shares of the Google parent surged more than 5% on Monday, adding to last week’s gain of more than 8%. The Big Tech stock is on track to finish November higher by more than 11%, which would mark its eighth straight winning month. GOOGL 1M mountain Alphabet, 1-month Wall Street sees Alphabet having an edge in building AI models. It’s also considered separate from the circular dealmaking tied to OpenAI that has raised alarm around a potential bubble in recent weeks. “Some investors are petrified that Alphabet will win the AI war due to huge improvements in its Gemini AI model and ongoing benefits from its custom TPU chip,” Melius Research analyst Ben Reitzes wrote to clients in a Monday note. “GOOGL winning would actually hurt several stocks we cover — so prepare for volatility.” One reason Alphabet’s rise is seen as bad news for other leading technology stocks is they could dominate at everyone else’s expense. “One hyperscale winner in AI would be the worst thing for almost everyone, especially if it is Alphabet,” Reitzes said. Before Nvidia ‘s 2% pop on Monday, shares had dropped nearly 6% last week despite posting blockbuster earnings and guidance. The chipmaker was poised to end November down nearly 12%. The Roundhill Magnificent Seven ETF (MAGS) — which tracks Alphabet, Nvidia and five other megacap tech companies — shed more than 2% last week. The fund is on pace to lose 4% in the trading month. The tech-heavy Nasdaq Composite finished last week down more than 2%, bringing its month-to-date loss around 4%. “You may be asking why almost all of the AI stocks we cover are selling off after such good news from Nvidia,” Reitzes said. “There is one real reason for worry and it is the ‘AI comeback’ of Alphabet.” Because Alphabet is the most vertically integrated hyperscaler and has a string of successes within hardware, Reitzes said it wouldn’t need to utilize solutions from Nvidia, AMD or Arista long term. On top of that, he said its Gemini product can gain AI workloads, resulting in a hit for Microsoft , Amazon and Oracle . When it comes OpenAI, Gemini’s recent momentum is causing investors to worry that the startup behind ChatGPT “is this generation’s AOL,” he said. Google announced its Gemini 3 model earlier this month. Silicon Valley is also taking note of Alphabet’s AI advancements. Salesforce CEO Marc Benioff said on X on Sunday that he’s “not going back” to ChatGPT, which he’s used daily for three years, after two hours on Gemini 3. “The leap is insane,” Benioff wrote. “Everything is sharper and faster. It feels like the world just changed, again.”
