Alphabet's TPU Sales Could Disrupt Nvidia's Dominance

Alphabet's second-quarter results exceeded expectations, particularly in its cloud business. The tech giant reported $24.8 billion in sales for Google Cloud, a 82% increase from the same period last year.

This growth is significant, as Alphabet's cloud backlog now stands at $514 billion. The company has been using custom AI chips called TPUs (Tensor Processing Units) to handle specific workloads in its cloud computing segment.

In a recent development, Alphabet CEO Sundar Pichai announced that the company would start selling TPUs to select outside customers due to soaring demand. These sales are expected to be a minuscule part of Alphabet's total revenue for now but could become a meaningful growth driver in the future.

This move puts Alphabet in direct competition with Nvidia, whose GPUs (Graphics Processing Units) are currently used by many companies. However, TPUs have some advantages over GPUs, including being cheaper and highly effective at handling specific workloads.