Neither. Stop it midway between the bottom of the hood and top of the cabs. it is more aesthetically pleasing than creating a harsh line directly at hood or cab tops.

ETA: buy a big roll of paper for $10 and play around with taping it at different levels (even using painters tape on the wall will give you a rough idea of how it will look).

Daisychain Zn3b    So not like this?  Appreciate your input.

Because you have something going across top, like mine, I would tile to the top of it like your picture. I think stopping part way would look off. JMO, not a pro.

If there is trim going level across the top of the cabinets and the chimney, tile all the way to that point. I would not create multiple horizontals in different materials across that space.

palimpsest and ker9  thanks I get it. Because there will be someplace to stop,  the tile should go up to that natural stopping place.

Thanks for all your input.

Sorry i missed the valence bridging the two upper cabs. Yes Take tile to that.