By TradingView
Publication Date: 2026-10-28 19:47:00
Alphabet Inc. (GOOGL, Financials), Google’s parent company, is shifting its cloud approach to increase sales of its bespoke AI processors through partnerships with third parties.
Customers will now be able to utilize Google tensor processing units (TPUs) outside of Google’s own infrastructure, thanks to Oracle’s launch of the product.
This opens up new opportunities for Google to compete with Nvidia in the artificial intelligence accelerator industry and expands the company’s addressable market.
Preliminary demand is rather high. In addition to OpenAI, Anthropic has committed to using up to one million TPUs, and Google has chips in its sights as well.
After an 82% increase in Q2, analysts predict that Google Cloud revenue will increase by 90% year over year. Though the potential for profit is high, the margins can be slimmer.
TD Cowen predicts that operating margins for TPU sales might be about 20%, which is lower than the 35% reported for Google Cloud as a whole in the previous quarter.
Nonetheless, Google’s own silicon still has appealing economics on the inside. Thomas Kurian, head of cloud computing at Google, has stated that servers powered by Google processors may recoup their costs in about half the time it takes other AI servers.
The prognosis for TPU demand, cloud profitability, and 2027 AI expenditure, as well as Alphabet’s third-quarter earnings announcement, will serve as the next catalyst.
