.Wall Street sees Google overtaking OpenAI and Nvidia in the AI race

Alphabet’s Google has taken a decisive step ahead of OpenAI’s ChatGPT, as recent market movements illustrate. Both Alphabet (GOOGL) and its silicon‑partner Broadcom (AVGO) have posted robust gains this quarter, while the proxies for the privately held OpenAI—Nvidia (NVDA) and Microsoft (MSFT)—have lagged behind.

Last month, Google stunned investors with the launch of Gemini 3, its latest large‑language model. In a series of independent benchmark tests, Gemini 3 matched or outperformed several capabilities of OpenAI’s ChatGPT and the broader GPT family, signaling that Google has transitioned from an AI laggard to a front‑runner.

Complementing the software breakthrough, Google introduced its seventh‑generation Tensor Processing Unit (TPU), dubbed “Ironwood,” in November. Early reports suggest the company is preparing to offer these custom ASICs to customers outside Google Cloud, opening a new revenue stream that could diversify Alphabet’s earnings beyond advertising.

The strategic partnership between Nvidia and OpenAI remains strong—Nvidia’s GPUs power the majority of ChatGPT’s inference workloads, and the two firms have agreed to invest up to $100 billion in AI data centers, targeting at least 10 GW of compute capacity. Microsoft, a major OpenAI investor, now holds roughly one‑third of the restructured for‑profit entity.

Since Gemini 3’s debut on Nov. 18, market sentiment has shifted dramatically in Google’s favor. Wells Fargo chief equity strategist Ohsung Kwon highlighted the divergence in a client note, noting that for the first time since 2016, stocks tied to OpenAI’s ChatGPT and Nvidia’s GPUs are trading at a discount relative to those linked to Google’s Gemini model and its TPUs, based on forward price‑to‑earnings multiples. “Gemini/TPU stocks now command a premium over ChatGPT/GPU peers for the first time in nearly a decade—the market is signalling that Alphabet is winning the AI race,” Kwon wrote.

OpenAI’s CEO Sam Altman appears to be feeling the pressure. According to a Wall Street Journal report, Altman announced a “code red” initiative to accelerate ChatGPT’s quality improvements, pushing back other product rollouts to focus resources on closing the performance gap.

The competitive dynamics are extending beyond software. Gemini’s user base has surged to roughly 650 million as of October, up from 450 million in July, underscoring rapid adoption. Meanwhile, Nvidia faces uncertainty over its dominant position in AI compute. A recent leak indicated that Meta—a major Nvidia customer—may be evaluating Google’s TPUs for its own data centers. In response, Nvidia posted a 3 % share decline but defended its technology on X, asserting that its next‑generation GPUs remain “a generation ahead of the industry” in raw performance.

From a market perspective, the AI sector is no longer a monolithic tide that lifts every boat. The Nasdaq‑100’s average pairwise stock correlation has fallen to a record low of 14 %, suggesting that winners and losers are beginning to separate. Alphabet’s stock has outperformed its “Magnificent 7” peers throughout November, a month when many tech names slumped. Year‑to‑date, GOOGL is up more than 66 % and has risen roughly 30 % this quarter alone.

Broadcom’s rally provides a parallel narrative. As a long‑time collaborator in the design and fabrication of Google’s custom ASICs, Broadcom stands to benefit from the expanding TPU ecosystem. Its shares are up about 65 % year‑to‑date, reflecting investor optimism around the growing demand for application‑specific integrated circuits in AI workloads.

In contrast, Nvidia’s meteoric two‑year run has stalled. While the stock remains up about 35 % for the year, it has slipped more than 2 % this quarter as investors re‑price the competitive landscape.

Looking ahead, the key questions revolve around monetization and scale. Will Google’s TPUs generate significant third‑party revenues, and can Alphabet translate its AI leadership into sustainable profit growth beyond advertising? Likewise, how will Nvidia respond to potential erosion of its GPU moat, and can OpenAI recapture market share with accelerated model improvements? The answers will shape the next chapter of the AI arms race and determine which companies emerge as the true beneficiaries of the burgeoning generative‑AI economy.