NVDA Stock Alert: Can Google Outpace Nvidia in the AI Chip Race?


  • Alphabet’s (GOOG, GOOGL) Google has fired a shot across Nvidia’s (NVDA) bow.
  • The tech behemoth has claimed its chips are faster and more efficient.
  • If this is correct, it could mean a difficult road ahead for NVDA stock.
"NVDA stock" - NVDA Stock Alert: Can Google Outpace Nvidia in the AI Chip Race?

Source: FP Creative / Shutterstock.com

The tech world has a new burning question that has investors on their toes. As the artificial intelligence (AI) boom has overtaken markets in 2023, a new chip race has taken shape. Many of the market’s top chip makers have shifted their focus to streamlining semiconductor production, including Nvidia (NASDAQ:NVDA). The Wall Street darling has risen to the top of Silicon Valley and NVDA stock seems poised to keep growing.

But recently, one of the sector’s giants issued a bold statement challenging its progress. Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) recently provided updates on its AI language model-training supercomputer. And it says that its technology is superior to Nvidia’s.

Does this mean that Nvida’s tech won’t ride the AI wave right to the top? Let’s take a look at Google’s statements and assess what investors should be expecting.

What’s Happening With NVDA Stock?

This isn’t a good day for the chip market in general. NVDA stock is down more than 2.5% as of this writing, and its current trajectory doesn’t hint at a rebound. However, it’s worth noting that plenty of its competitors are also in the red today. Both Advanced Micro Devices (NASDAQ:AMD) and Intel (NYSE:INTC) are down for the day, as is international rival Taiwan Semiconductor (NYSE:TSM). It’s unlikely that Google’s comments are pushing NVDA down, especially as both GOOG and GOOGL are falling as well.

That said, the claims made by the tech behemoth do warrant some closer analysis. It released the statements concerning Nvidia in a paper detailing its new supercomputer progress. As of this writing, Nvidia has not issued a response. Per Reuters:

“In the paper, Google said that for comparably sized systems, its chips are up to 1.7 times faster and 1.9 times more power-efficient than a system based on Nvidia’s A100 chip that was on the market at the same time as the fourth-generation TPU.”

If what Google assesses is true, then Nvidia could certainly have a difficult time keeping pace with it. But it’s important to examine both companies from a macro perspective.

Google’s journey into the AI market hasn’t been so smooth. When a glaring error detailed the initial launch of its own AI chatbot, GOOG stock took a significant nosedive. InvestorPlace reported that shares were likely to bounce back and they have been primarily in the green since. However, its progress doesn’t mean that anyone should be quick to dismiss Nvidia.

Where Can It Go From Here?

InvestorPlace contributor Chris MacDonald recently made a bullish case for NVDA stock, laying out why he sees it as both a short-term and long-term winner. As he sees it, Nvidia is distinct from other chip makers in terms of its growth prospects. In his words:

“The company’s fundamental growth drivers remain intact, making Nvidia among the easiest companies for investors to assign a higher-than-market multiple to. Interestingly, I don’t think multiple expansion is necessary for NVDA stock to go higher. This is a company with strong fundamentals and secular growth tailwinds that should take it higher over time.”

As of now, it is impossible to say if Google can truly blow past Nvidia in the AI chip race. It’s hard to compete with the resources of one of the world’s biggest tech companies. However, Nvidia has done a good job holding its own against larger rivals before. If nothing else, we can expect it to put up a good fight as the chip war wages on.

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/nvda-stock-alert-can-google-outpace-nvidia-in-the-ai-chip-race/.

©2023 InvestorPlace Media, LLC