A meaningful shift in the AI race happened this Thursday as Alphabet’s 63% Google Cloud surge, the highest in its history, reframed the “Largest Company” debate. While combined AI spending for the top four hyperscalers is now projected to exceed $700 billion this year, investors are beginning to punish blind spending like Meta’s while rewarding monetized growth like Alphabet’s.
Alphabet CEO Sundar Pichai’s revelation that Google is now selling its proprietary AI chips directly to customers marks a direct competitive challenge to Nvidia’s dominance, as the industry-wide capacity crunch forces customers toward full-stack alternatives.
Trade analysis
This earnings reset could shift the odds for the June settlement. The “Magnificent Seven” are no longer equals as a clear divergence has emerged between firms with clear AI ROI and those struggling with spending risks.
Bullish signals for Nvidia:
- Microsoft’s projected $190B outlay and Amazon’s $200B commitment signal that the demand for Nvidia’s H100/B200 silicon still outweighs supply through at least 2027.
Bearish signals:
- Alphabet selling its custom AI chips directly to large enterprises like Anthropic threatens Nvidia’s total market share.
Nvidia is still seen as the safe haven trade though seriously challenged by Alphabet’s momentum for the very first time. Our strategy is to reduce “Yes” exposure on Nvidia if the implied probability stays too high, and rotate into Alphabet for the June “Largest Company” or “Top 2” contracts.