Wall Street - Investors Spooked by Google-Led Market Rally

(Seoul=Yonhap Infomax) Yong Wook Kwon – The recent surge in equities driven by Alphabet Inc.'s (NASDAQ: GOOGL) advances in artificial intelligence (AI) has revived market sentiment, but some analysts are raising concerns.

According to CNBC on the 24th (local time), Ben Reitzes, analyst at Melius Research, noted in a report, "Some investors are worried that Alphabet could win the AI race thanks to significant improvements in its Gemini AI model and sustained leadership in custom Tensor Processing Unit (TPU) chips."

Previously, AI tools centered around OpenAI have been heavily reliant on NVIDIA Corp.'s (NASDAQ: NVDA) graphics processing units (GPUs), raising concerns over the substantial costs associated with GPU procurement, maintenance, and depreciation.

In contrast, Google has built its Gemini system around its proprietary TPU AI chips, significantly reducing external expenditure. With the training phase for major AI services largely complete, expectations are rising that TPUs—known for their strength in inference—will play an even greater role going forward.

Alphabet shares jumped more than 6% on the day, buoyed by positive reviews of Gemini 3.0.

However, Reitzes cautioned, "If Google emerges victorious, it could actually harm several stocks we cover."

He added, "Alphabet is the most vertically integrated hyperscaler and has achieved a series of hardware successes. As a result, there may be no long-term need to utilize solutions from NVIDIA, Advanced Micro Devices Inc. (NASDAQ: AMD), or Arista Networks Inc. (NYSE: ANET)."

Reitzes further observed, "Moreover, if Gemini products capture AI workloads, it could deal a blow to Microsoft Corp. (NASDAQ: MSFT), Amazon.com Inc. (NASDAQ: AMZN), and Oracle Corp. (NYSE: ORCL)."

Regarding OpenAI, he noted, "Gemini is fueling investor concerns that the startup behind ChatGPT could become 'this generation's AOL.'" AOL was once the largest and most influential internet service provider in the US and globally until the early 2000s, but ultimately collapsed under the weight of new technologies.

ywkwon@yna.co.kr

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