Prediction: 2 AI Stocks Will Be Worth More Than Nvidia and Palantir Technologies Combined in 2026

Currently, Nvidia is worth $4.4 trillion, and Palantir Technologies is worth $424 billion. That brings their collective market value to $4.8 trillion as of Dec. 4.

I think Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT) can top that figure by the end of 2026. Here's what my prediction would mean for shareholders:

• Alphabet is currently worth $3.8 trillion. The stock must increase 29% for the company to achieve a market value of $4.9 trillion.
• Microsoft is currently worth $3.6 trillion. The stock must increase 36% for the company to achieve a market value of $4.9 trillion.

Here's what investors should know about these artificial intelligence (AI) stocks.

Image source: Getty Images.

1. Alphabet

Alphabet is the largest adtech company in the world due to its ability to engage consumers with Google Search and YouTube. The company is leaning on artificial intelligence (AI) to improve engagement and better monetize those web properties. AI Overviews and AI Mode have made Google Search more popular, and AI tools are assisting YouTube creators with generating, editing, and optimizing content.

Alphabet's Gemini application, an AI assistant built on Gemini large language models (LLMs), now has over 650 million monthly active users. It's the second-most popular AI assistant behind ChatGPT, affording the company yet another ultra-popular advertising platform. In total, Alphabet's advertising revenue increased 13% in the third quarter, the second straight acceleration.

Meanwhile, Alphabet's Google Cloud is the third-largest public cloud by infrastructure and platform services spending, and the company gained 2 percentage points of market share in the last two years, due in large part to AI expertise. Gartner recently recognized Google as the most capable cloud platform for AI application development, and Forrester Research has recognized its leadership in LLMs.

Revenue from products built on Google's generative AI models surged more than 200% in the third quarter, while total cloud revenue increased 34%, the second straight acceleration. Demand for AI infrastructure should keep that trend intact. Morgan Stanley analysts expect Google Cloud revenue growth to accelerate to 44% in 2026

Here's the big picture: Alphabet's earnings per share increased 37% in the third quarter, which makes the current valuation of 31 times earnings look quite reasonable. If Alphabet's earnings increase 29% in the next year, its market value can reach $4.9 trillion without any change in its P/E ratio. That seems plausible, given its momentum in advertising and cloud computing.

2. Microsoft

Microsoft is the largest enterprise software company in the world. While best known for its office productivity suite, the company also has a leadership position in other verticals, including business intelligence, cybersecurity, and enterprise resource planning. Microsoft is exploiting its dominance in software to monetize artificial intelligence.

The company has developed generative AI copilots for many of its software products. For instance, Microsoft 365 Copilot automates tasks across applications like Word, Excel, and PowerPoint. Similar tools exist for software products in other categories, and its entire suite of Copilot applications topped 150 million monthly active users in the September quarter, up from 100 million in the June quarter, according to CEO Satya Nadella.

Meanwhile, Microsoft Azure is the second-largest public cloud, and it gained a percentage point of market share in the past year. While Azure remains capacity constrained with respect to AI infrastructure, it plans to "roughly double" its data center footprint in the next two years. That should keep cloud sales growing faster than the overall market, which is forecast to expand at 20% annually through 2030.

That trend was evident in Morgan Stanley's third-quarter CIO survey. Microsoft was once again listed as the cloud computing platform most likely to gain market share in the next three years. Factors contributing to its momentum include Azure's deep integrations with Microsoft software products, substantial investments in AI infrastructure, and its robust suite of cloud AI services.

Here's the big picture: Microsoft's adjusted earnings per share increased 21% in the most recent quarter. That makes the current valuation of 33 times adjusted earnings tolerable. If Microsoft's earnings increase 21% in the next year, its market value will hit $4.9 trillion if its P/E ratio expands to 38.

While that prediction is aggressive, it is within the realm of possibility. Microsoft had a P/E ratio of 39 in July 2025. Also, at least seven Wall Street analysts have set the stock with a target price above $660 per share, implying a market value of at least $4.9 trillion.

Nevertheless, Alphabet has a better shot at $4.9 trillion in the next year, and I would buy that stock before Microsoft without hesitation.

Trevor Jennewine has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends Gartner and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.