On theCUBE: AI boosts Google’s market value and Nvidia resets AI factories

The new year opened with a flurry of AI news: Google LLC parent company Alphabet Inc. hit $4 trillion in market capitalization, and Nvidia Corp. cemented its dominance in the AI factory business.

Alphabet’s growth can be attributed to Google’s aggressive AI strategy. The company made a deal with Apple to use Gemini for Siri and debuted a universal commerce protocol for agentic shopping. OpenAI Inc. and Anthropic PBC aren’t slacking either so expect to see competition heat up in 2026.

“We’re in the third inning [of AI],” said Dave Vellante (pictured, right), chief analyst for theCUBE Research. “The first inning was like 2017, and when they were talking about transformers and diffusion models and … nobody was really paying attention. The second inning was the AI heard around the world in November 2022. I think now with the agentic, we’re entering the third inning, the third phase. I do think this is the year that organizations are going to start insisting on real value.”

On the latest episode of theCUBE Pod, Vellante and John Furrier (left), executive analyst, discussed the AI outlook in 2026 and Nvidia’s power over the current market. They also explored the strategies of other big players, such as Google, Anthropic and OpenAI, and how AI is changing the retail sector.

Retail undergoes AI-native transformation

The Consumer Electronics Show and National Retail Federation made it clear that autonomous agents represent a profound shift for retail. The emphasis was on execution over strategy at both shows, according to Furrier. He believes the strategy itself is obvious: Adopt AI as fast as possible.

“Retail is going to be completely transformed by AI,” he said. “Commerce as we know it will be agent-driven. You’re starting to see companies … record revenue because they got in agents early and had a lead on everybody else. You’ve got to get in early and get these agents up and running [for] these low-hanging fruit use cases. It was clear that that was going to be the key.”

Nvidia was, unsurprisingly, the star of the show at CES. The takeaway from Nvidia CEO Jensen Huang’s presentation was that Nvidia isn’t losing momentum anytime soon, according to Vellante and David Floyer’s analysis. Its so-called “extreme codesign” for its chips and volume-driven learning curve is resetting the roadmap for AI factories.

Another takeaway challenges the common wisdom that before getting into AI, companies need to clean up their data first. Instead, companies should get into AI as fast as possible and then use it to fix their data problems, according to Vellante.

“Don’t worry about cleaning up your data before you get to AI,” he said. “Use AI to help cleanse the data. That is somewhat non-intuitive. One of the customers said to me, ‘Most of our data is still crap, but the AI helps us find the good data, extract what we need, harmonize it, go out and get other third-party data that we might need to complete the picture and get on with it.’”

Retail has certainly jumped on AI, transitioning into fully autonomous systems that could potentially bridge the physical and digital worlds. Physical AI is finally becoming a reality and the implications are dramatic. In the first seven months of 2025 alone, robotics companies and startups received more than $6 billion in capital.

“Retail stores are going to make a huge comeback,” Furrier said. “When you combine digital and physical with AI at retail and the edge, that’s going to humanize the digital-physical connection. Agents are going to do all kinds of new stuff. When you start putting AI factories at the edge or in metro areas, all kinds of new stuff is going to come out of the woodwork capabilities-wise. It’s almost a dream scenario on outcomes. And Nvidia knows this.”

Nvidia is dominant, but Google stays competitive

If Nvidia’s grip on the market won’t loosen any time soon, where does that leave the other AI players? AI chip start-ups Cerebras Systems Inc. and Etched.ai Inc. received huge investments and Anthropic released Cowork, an AI companion for Claude Code — and it’s already getting rave reviews. The upcoming “IPO derby” could also shake things up.

Google continues to expand its reach with Gemini, but when it comes to the company’s investments in Tensor Processing Units (TPUs), there’s more doubt in the air. Vellante predicts that TPUs won’t keep up with Nvidia, which has the advantage for scale-up.

“Everybody’s talking about TPUs,” he said. “They’re crazy about TPUs. I think Nvidia is going to blow all that away and that’s going to become more obvious. I think AMD and Intel [are] trying to play catch-up. It’s going to be very difficult for them to do that in the data center unless Nvidia stumbles. Their opportunity … is the edge, and I think the edge is wide open.”

AI factories at the edge appear to be imminent, with promising hints from Huang at the recent GSA Awards ceremony. The sovereign cloud game could potentially shift to mini AI factories in metro areas, according to Furrier, who sees the “far edge” as a growing sector.

“It wouldn’t be unlikely for New York City to collapse the wireless and wire connectivity into one big multi-tenant system, meaning it’s basically an AI factory,” he said. “You can run homeland security on it. You can run VPNs, corporate services that could be sold by the carriers like Verizon, AT&T, T-Mobile or whoever. You have Ethernet everywhere.”

Where the AI race goes next

Nvidia’s strategy has been to partner with, or acquire, AI startups and potential competitors. Although Google’s TPUs could provide some competition against Nvidia, the true AI showdown might be between Google, which has access to tons of data, and OpenAI, which has the advantage of being the first mover.

“They’re too close to call,” Furrier said. “I think OpenAI will continue to drive. They do have the edge. The secret to these models is … that it’s who uses the models best for the data that’s not yet in the big corpuses. Meaning LLMs, large language models like Gemini, have to crawl the web basically to oversimplify it — and they’ve got everything. So, it’s a matter of who can fine-tune that, make it better and make the responses more accurate.”

Watch the full podcast below to find out why these industry pros were mentioned:

Brian J. Baumann, founder of NYSE Wired and director of capital markets, technology at NYSE
Jensen Huang, president, co-founder and CEO at Nvidia
Sundar Pichai, chief executive officer at Alphabet
Sam Altman, co-founder and CEO at OpenAI
Vera Rubin, American astronomer (1928-2016)
John Lovelock, chief forecaster at Gartner
Elon Musk, CEO of Tesla
Sarbjeet Johal, founder and CEO of Stackpane
David Floyer, analyst emeritus at theCUBE Research
Philip Don Estridge, American computer engineer (1937-1985)
Charles Fitzgerald, consultative strategist and investor
Aaron Levie, CEO of Box
Rob Strechay, host and principal analyst for theCUBE Research
Mark Zuckerberg, CEO at Meta Platforms
Peter Tuchman, stock trader, Einstein of Wall Street
Michael Dell, chairman and CEO at Dell Technologies

Here’s the full episode of this week’s theCUBE Pod:

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