Key Points
Alphabet's cloud backlog just surged 55% sequentially to $240 billion.
Nvidia's data center revenue soared 75% year over year in its latest quarter.
When comparing the two AI stocks, one is the clear winner.
Both Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) and Nvidia(NASDAQ: NVDA) have established themselves as foundational pillars of the artificial intelligence (AI) revolution. But when looking ahead over a 10-year horizon, the question isn't whether both businesses will succeed -- it's which stock offers the better risk-adjusted path for investors from today's starting line.
On the surface, Nvidia's momentum looks unstoppable. The semiconductor giant just reported another quarter of staggering growth. Yet beneath the headline numbers, the comparison isn't so simple. Ultimately, one of these two tech behemoths comes out ahead when comparing their business durability and valuation expectations.
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Alphabet: a cloud-computing catalyst
Alphabet recently reported its fourth-quarter results for 2025, and the headline numbers were exceptional.
The tech giant's revenue for the period rose 18% year over year to $113.8 billion. And the company's full-year revenue notably crossed the $400 billion mark for the first time in its history.
But the real story for long-term investors is what is happening inside Google Cloud, the company's cloud computing business.
Google Cloud revenue surged 48% year over year to $17.7 billion in Q4. Highlighting its scale, the segment is now operating at an annual run rate of more than $70 billion.
Additionally, this segment provides investors with visibility. Management noted during the company's earnings call that Alphabet's cloud backlog swelled by 55% quarter over quarter to a massive $240 billion.
This soaring backlog is driven by strong demand for its cloud products, led by its enterprise AI offerings, including Gemini, which -- by the way -- is now processing over 10 billion tokens per minute for customers via direct API (a connecting middleman for two different software programs to exchange information and collaborate) use.
This level of committed backlog gives Alphabet a highly predictable, recurring revenue stream. Further, because Alphabet pairs this enterprise momentum with its massive, highly profitable consumer properties like Google Search and YouTube, its overall business is broadly diversified and less susceptible to the boom-and-bust cycles typical of semiconductor sales.
Nvidia: staggering growth
Of course, Nvidia is growing even faster.
The chipmaker's fiscal 2026 fourth-quarter data center revenue skyrocketed 75% year over year to a record $62.3 billion, accounting for the bulk of its revenue. This helped its full-year revenue jump 65% year over year to $215.9 billion.
And the business is extremely profitable. Net income for the year hit an astounding $120 billion.
But hardware demand can be deeply cyclical.
Right now, major tech companies -- including Alphabet -- are racing to build out the AI infrastructure required for the next decade. Nvidia's gross margins, which sat at a lofty 75% in Q4, reflect extraordinary pricing power. Over a 10-year horizon, however, it is less certain what Nvidia's demand profile and margin structure will look like once the initial, frantic infrastructure build-out normalizes and competitors increasingly roll out their own custom silicon.
And despite this heightened risk profile, the stock trades at a significant premium to Alphabet. As of this writing, Nvidia trades at about 37 times earnings, compared to Alphabet's price-to-earnings ratio of 28.
For Nvidia stock to deliver market-beating returns for investors from here, it will need to continue growing rapidly while protecting its margins. This might sound easy on the surface, but investors should remember that the Nvidia we know today is the result of a major AI boom with unpredictable characteristics.
Which AI stock is the better buy?
I believe that Alphabet's combination of surging, highly visible cloud growth, a deeply entrenched consumer ecosystem, and a more forgiving valuation arguably makes it the better long-term bet.
There are risks, of course. Namely, Alphabet's cloud build-out is incredibly expensive. The company expects to spend $175 billion to $185 billion on capital expenditures this year, with a large portion of that aimed at AI compute capacity. If these investments don't deliver a high enough return, the stock could underperform. On the other hand, if the payoff is good, the stock could soar over the next 10 years.
Ultimately, if you are choosing just one of these AI leaders to hold for the next 10 years, Alphabet's diversified business and surging $240 billion backlog make it the bigger potential winner.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
