- Google is expanding sales of its custom TPU chips to independent cloud providers, moving beyond exclusive use within Google Cloud.
- The company is targeting “neocloud” providers like NVIDIA-backed Nscale, pitching TPUs as offering more stable performance than GPUs.
- Wall Street is reassessing AI spending amid this hardware shift, with UBS lowering price targets on Alphabet and Meta ahead of earnings.
Alphabet-led Google is reportedly expanding efforts to sell its custom AI chips to independent cloud providers, directly challenging Nvidia’s dominance in AI hardware. According to a report by The Information, the company is specifically targeting “neocloud” providers to increase adoption of its custom TPUs, including Nvidia-backed Nscale.
The report notes that Google’s tensor processing units have been housed almost entirely in its own facilities and rented out only through Google Cloud. Now, the company is pitching TPUs as offering more stable performance and simpler networking than competitor GPU-based systems, particularly as Nvidia’s newer systems have caused deployment headaches for buyers.
However, Nvidia reportedly caught wind of the talks and discussed financial incentives with Nscale to keep the neocloud away from TPUs, a characterization Nscale disputed. The move could also strengthen Google’s bid for a larger share of production from Taiwan Semiconductor Manufacturing Company, where Nvidia is currently the biggest customer.
Meanwhile, the reported expansion comes as Wall Street reassesses AI infrastructure spending. UBS on Monday cut its price target on Alphabet to $400 from $410 and lowered the target on Meta Platforms to $766 from $865, both moves tied to upcoming second-quarter earnings.
At the same time, Morgan Stanley raised its capital expenditure forecasts for Meta and Amazon, expecting hyperscaler AI spending to reach roughly $1.2 trillion in 2027. Alphabet is scheduled to report its Q2 earnings on July 22, with Wall Street expecting earnings of $2.90 per share on $116.8 billion in revenue.
GOOG stock edged 0.5% lower in midday trade on Monday amid a broader market sell-off following rising oil prices. The stock has gained over 10% this year and nearly doubled over the past 12 months.
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