Google’s Gemini 3 Shakes Up the AI Race and Sends Chip Stocks Sliding

Google’s rapid ascent in the AI race is reshaping the dynamics of the tech and semiconductor markets, with its newly released Gemini 3 model emerging as a major catalyst. 

The model debuted to enthusiastic reviews, including high praise from Salesforce CEO Marc Benioff, who declared he is “not going back” to ChatGPT after trying it out (Investors Business Daily). Google parent Alphabet’s stock has surged accordingly, rising nearly 5 percent on Monday after an 8 percent rally the previous week. With a 64 percent gain so far this year, Alphabet is now the top-performing Magnificent Seven stock of 2025. Even OpenAI CEO Sam Altman acknowledged the strength of Gemini 3, telling employees that although OpenAI is “catching up fast,” the company should brace for “rough” vibes as Google gains momentum (Investors Business Daily).

But Google’s dominance is raising concerns in unexpected places. According to Melius Research analyst Ben Reitzes, the biggest “risk to watch” in AI stocks is not just fears of an AI bubble but the possibility that Google could win the race for the leading AI model. If that happens, spending could shift dramatically away from companies deeply tied to OpenAI, including Nvidia, AMD, Microsoft, CoreWeave, Oracle, and Broadcom (Investors Business Daily). OpenAI has committed to more than one trillion dollars in AI infrastructure investments over the next eight years, and it relies heavily on enterprise adoption to sustain that growth. By contrast, Google runs its own hyperscale cloud and designs custom chips, giving it a vertically integrated approach that could cut other suppliers out of future revenue streams.

Markets are already reacting to this shift. Nvidia and AMD stocks plunged sharply after reports that Meta is considering buying billions of dollars’ worth of Google’s tensor processing units, or TPUs, in the coming years, possibly even renting them as early as next year (Yahoo Finance; MSN). Nvidia, currently the world’s largest company by market cap, saw shares fall 6 percent on Tuesday, while AMD dropped 10 percent and other chipmakers including Intel, Micron, and Taiwan Semiconductor also slipped. These declines briefly pulled the Nasdaq down 1 percent before a partial rebound. Meta, one of the biggest spenders in the AI industry, is projected to allocate up to 72 billion dollars in capital expenditures next year, much of it targeted toward AI infrastructure (Yahoo Finance).

Alphabet, meanwhile, has been surging. Its stock jumped as much as 4 percent on Tuesday and has gained 18 percent over the past month, up 67 percent this year, as investors grow increasingly confident in Google’s expanding influence in the AI hardware and software ecosystem (MSN). Although Nvidia emphasized that it remains “a generation ahead” of competitors and continues to supply Google, Alphabet’s ability to meet accelerating demand for both its TPUs and Nvidia GPUs reinforces that it is becoming a central force in the AI supply chain (Yahoo Finance; MSN). Broadcom, which partners with Google to design custom chips, has also benefited, with its stock jumping 11 percent as investors sought alternative ways to ride Google’s momentum (Yahoo Finance; MSN).

Despite concerns about volatility and bubble-like conditions, some analysts remain optimistic about the broader AI market. Wedbush analyst Dan Ives argued that Big Tech’s ongoing investment cycle remains strong and will continue powering market growth into 2026, positioning AI as the engine of the next era of expansion (Investors Business Daily). Still, with Google’s Gemini 3 raising the competitive stakes and prompting shifts in hardware alliances, the landscape is entering a new phase in which the winners and losers of the AI arms race could look very different from those of the past decade.

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Works Cited

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Yahoo Finance. “Google's on a Roll — and Nvidia and Other Chipmakers Are Feeling the Heat.” Yahoo Finance, finance.yahoo.com/news/nvidia-stock-under-pressure-ai-223933328.html.

MSN. “Google’s on a Roll and Nvidia and Other Chipmakers Are Feeling the Heat.” MSN, www.msn.com/en-us/news/technology/googles-on-a-roll-and-nvidia-and-other-chipmakers-are-feeling-the-heat/ar-AA1R80uC.

“Google’s Gemini 3 Model Keeps the AI Hype Train Going – For Now.” New Scientist, 2025, www.newscientist.com/article/2505039-googles-gemini-3-model-keeps-the-ai-hype-train-going-for-now/.

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Broadcom Soars as Google Partnership Fuels Investor Hope - Rolling Out. “Broadcom Soars as Google Partnership Fuels Investor Hope.” RollingOut, 25 Nov. 2025, rollingout.com/2025/11/25/broadcom-stock-surge-alphabet-google-ai/.