Google's LLM Ascendancy Spells Big Problems for Nvidia, says Analyst

For years, Nvidia was synonymous with market leadership at a $5 trillion valuation.

Its graphics processing units powered the artificial intelligence revolution, and the company's stock became Wall Street's favorite proxy for the sector's explosive growth.

But in late 2025, a remarkable shift has occurred, says Columbia analyst Gregory J. Blotnick, one that's reshaping the landscape and sending shockwaves through the entire stock market.

The Comeback of 2025?

When ChatGPT launched, many questioned whether Google had lost its way, with early product mishaps like the problematic Imagen 2 launch reinforcing those doubts. Fast forward to today, and the narrative has completely flipped. Google's launch of Gemini 3 has prompted billionaire Marc Benioff to declare he's switching from ChatGPT after three years, calling the advancement insane.

The numbers tell a compelling story. Alphabet delivered its first-ever $100 billion quarterly revenue in Q3 2025, marking a 16% year-over-year increase driven primarily by technology. More impressive still, the company's Gemini assistant reached 650 million monthly active users, with token processing volume increasing more than twentyfold year-over-year.

What makes Google's resurgence particularly noteworthy is its comprehensive ecosystem. Unlike competitors focused solely on chatbots or chips, Google has integrated LLMs across Search, YouTube, and Google Cloud, creating multiple revenue streams from a single technological foundation.

The Hardware Revolution

Perhaps nothing is more "Google" than their Tensor Processing Units. The newly released Ironwood TPU, Google's seventh generation, can link up to 9,216 chips into a single cluster, eliminating data bottlenecks for the most demanding models. This capability has attracted enterprise giants, with reports emerging that Meta is in talks to spend billions on Google's chips for its 2027 data centers.

The market has noticed. Following news of Google's advances, Nvidia saw as much as $250 billion wiped from its market capitalization, a stunning reversal that underscores how quickly leadership can shift. While Nvidia still controls over 90% of the chip market, Google's full-stack approach offers efficiency advantages that are increasingly difficult to ignore.

Google's TPUs deliver 50% productivity improvement compared to traditional GPU hardware, and unlike Nvidia's chips, which serve all customers, Google's designs optimize specifically for its own workloads. This vertical integration echoes successful historical business models where controlling the entire stack created sustainable competitive advantages.

Stock Market Implications

The investment community has started recalibrating. Google's equity has been the best performing of the Mag-7 companies in 2025, with shares up more than 87% over six months. The company recently overtook Microsoft in market value to become the third-largest U.S. company by market capitalization, trailing only Apple and Nvidia itself.

This performance comes despite massive capital expenditures. Google plans to spend between $91 billion and $93 billion on capital expenditures in 2025, with more than 60% allocated to servers and infrastructure. Unlike competitors whose cash reserves are declining due to spending, Google maintains nearly $98.5 billion in cash reserves while funding infrastructure investments and rebuilding its cash position.

For investors, this raises a critical question: Should portfolios shift from pure-play infrastructure companies like Nvidia toward integrated platforms like Google? The answer likely depends on investment timeframe and risk tolerance. Nvidia remains dominant in the near term, but Google's diversified revenue model provides downside protection that chip manufacturers lack.

What Does This Mean Going Forward?

The transition from Nvidia to Google as the poster child reflects a maturing industry. The early era prioritized raw computational power, where whoever could build the biggest, fastest chips won. But as AI applications become more sophisticated, success increasingly depends on the ability to deploy intelligence across diverse use cases, from consumer search to enterprise cloud services to custom hardware.

Analysts now assign Google higher likelihood of superior stock price performance through 2026, driven by its comprehensive ecosystem and business integration capabilities. The company's current price-to-earnings ratio of approximately 22-29 appears conservative given its growth trajectory and market position.

This doesnt spell doom for Nvidia. The revolution still requires massive computational resources that Nvidia supplies better than anyone. But Google's ascendancy demonstrates that in technology, leadership is fluid. The companies that win aren't always those with the most advanced hardware, but those that best integrate new capabilities into products people actually use.

For the stock market, this leadership transition suggests that investing may be entering a new phase where platform companies with multiple monetization paths outperform specialized providers. As 2026 approaches, all eyes will be on whether Google can sustain its momentum, and whether Nvidia can reclaim its throne.