Can Alphabet Overtake Nvidia in 2027?

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the world's third-largest company, sitting around a $4 trillion market cap. Nvidia (NASDAQ: NVDA) is the largest, valued at about $5.4 trillion. Although it would be a huge gap to close, some investors are wondering if Alphabet can rise to the top of the world in 2027.

That's a tall task, but is Alphabet up to it? Let's take a look.

Image source: Getty Images.

The case for Alphabet

Alphabet has turned its fortunes around in the AI race. Last year, Alphabet was the laughingstock of the AI world, with several failed product launches, an AI model that couldn't compete with some of the giants in the space, and the potential for its primary cash cow, the Google Search engine, to be replaced entirely by AI. The outlook was bleak, but it got turned around.

Now, Alphabet is among the leaders in the AI realm, and its Gemini helped land it there. Additionally, Google Search has seamlessly integrated AI search overviews, which is likely the most interacted-with AI tool in the entire world.

Furthermore, all of Alphabet's investments in its cloud computing platform, Google Cloud, appear to be paying off. This division saw jaw-dropping 82% growth during the second quarter, the biggest growth number among the big three cloud providers by a long shot. With Alphabet spending $200 billion on data center capital expenditures in 2026, there is more computing capacity slated to come online that could boost Google Cloud's growth rate over the next few years.

This progress has made Wall Street analysts very excited, and they project 24% growth for 2026 and 23% growth in 2027. Those are strong projections, but are they enough to propel it to overtake Nvidia?

I don't think so.

The case for Nvidia

Nvidia is just growing too rapidly for Alphabet to catch it. There is huge demand for its computing equipment, as evidenced by Alphabet's and its peers' massive AI spending. This is expected to lead to monster growth once again next year, with Nvidia's CFO, Colette Kress, announcing that management expects 70% growth next year. Historically, Nvidia has underguided and overdelivered, and if it does that again here, the result will be incredible.

The growth Nvidia expects to achieve next year would take Alphabet three years to deliver, and with Nvidia already having a $1.4 trillion head start, there's no way Alphabet catches up to Nvidia unless the AI build-out thesis collapses. Furthermore, Nvidia and Alphabet actually trade at about the same valuation.

Alphabet's price-to-earnings (P/E) ratio is currently skewed by large gains on investments, so I'll use the operating P/E ratio to value them instead. From this perspective, Nvidia's valuation has dropped significantly over the past year, while Alphabet's has risen.

GOOG Operating PE Ratio data by YCharts

If asked to determine which of the two stocks would perform better over the next year with the same starting price, you'll likely choose the one that's projected to grow at a 70% rate every single time.

I think that case holds with these two as well, and even though I like Alphabet as an investment and think it will do well and outperform the market, it just doesn't have the growth necessary to overtake Nvidia as the world's largest company. With the AI build-out expected to last several more years, I think that makes Nvidia the top AI stock to buy and hold in the near term. However, balancing out the high growth potential of Nvidia with a steadier grower like Alphabet also makes a lot of sense for most investors.

Keithen Drury has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.