An AI company is making popular AI chips and developing a leading large language model, expecting strong sales growth across hardware and more developers licensing its model. The stock trades at a value relative to Nvidia, with potential for shares to rise in 2026.

Alphabet has shown significant progress in artificial intelligence, with Google Cloud division revenue growing by 34% and operating margin expanding to 24%. Strong demand for custom-built Tensor Processing Units (TPUs) may continue in 2026, fueling growth for Google Cloud with significant margin improvements.

Alphabet stands out by using its own AI innovations to enhance its core businesses like search and YouTube, with revenue growth accelerating through the first three quarters of 2025. Progress with Waymo self-driving car business could be a key revenue source as it expands to new cities in 2026.

Investors can pick up Alphabet shares for less than 30 times forward earnings expectations, offering strong earnings growth potential as cloud computing business scales. On the other hand, Nvidia may face challenges in 2026 as competition in AI accelerators increases, making Alphabet a potential better performer in the coming year.

Read more at Nasdaq.: Prediction: 1 Artificial Intelligence (AI) Stock That Will Outperform Nvidia in 2026