A $1,000 Investment Split Between Alphabet and Nvidia Will Be Worth This Much by 2030

Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Nvidia (NASDAQ: NVDA) are two of the biggest companies involved in the AI race. Nvidia is the world's largest company, while Alphabet is the third-largest behind Apple, which isn't pursuing AI technology as aggressively as Alphabet.

Both of these companies have an incredibly bright future, and I think they will make investors a lot of money from now through 2030. How much will a $1,000 investment split between the two be worth? Let's take a look.

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Alphabet and Nvidia's success will look different

Alphabet and Nvidia are both competitors and partners.

Nvidia's approach to AI is a bit more straightforward than Alphabet's, as it's focused on selling as many computing units as possible to power AI workloads. Its product lineup is centered around the graphics processing unit (GPU), which excels at nearly every task you can throw at it. GPUs are used by every company in the AI race (including Alphabet) and will be used for the foreseeable future.

However, they aren't always the right tool for the job. Sometimes a GPU can go its whole lifespan running the same workload. This is a waste of its capabilities, and it could be replaced by a computing unit purpose-built for that workload. Alphabet has done just that by designing and outsourcing the fabrication of its tensor processing unit (TPU) to Broadcom.

Alphabet's TPUs are incredibly popular, and it's even selling them to others because they represent an upgrade over a GPU when less flexibility is needed. This could eat into Nvidia's business over the next few years, but with Nvidia expected to grow its revenue at a 70% pace during next year, I'd say it's doing just fine.

Alphabet also has other AI investments. It has integrated AI into Google Search, its primary cash cow. Alphabet also has its own family of large language models integrated into various AI products, which could be a growing source of revenue. Perhaps its biggest growth division will be Google Cloud, its cloud computing division.

Cloud computing is a major beneficiary of the AI build-out. Many AI businesses lack the computing power to run their operations, so they rent it from a hyperscaler like Alphabet. During the second quarter, this division grew at a remarkable 82% pace, and with Alphabet spending $200 billion on data center capital expenditures this year, the growth rate will likely stay elevated for a long time.

Both Alphabet and Nvidia have grown their business prospects, but where will that place their stocks by 2030?

Nvidia will likely provide greater returns

Understanding what 2030 will be like for these two will be difficult, but I think there's enough information to get us there. Nvidia estimates global data center capital expenditures will reach $3 trillion to $4 trillion by 2030. Right now, the big five AI hyperscalers are spending around $800 billion. That's about a fourfold increase in total market opportunity over the next few years. If Nvidia can quadruple its revenue, that would likely result in the stock following suit, because it trades at a reasonable price tag of 28 times earnings.

Alphabet is a bit trickier. I think that, with the investments it's making, it could grow revenue and profits at a 25% compound annual growth rate (CAGR), given that it grew at 24% in the second quarter. A 25% CAGR from now until the end of 2030 equates to a 158% growth rate.

That indicates that Alphabet's stock will more than double. So, a $1,000 investment split between these two stocks, using these projections, indicates a final value of over $3,000. That would be an incredible gain in just a bit over four years, making these two stocks no-brainer buys right now.

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