Google's AI Chip Expansion Threatens to Pull Down Nvidia's Prices

Nvidia and Alphabet (GOOGL) both benefited from the AI boom in their summer quarter reports, but Alphabet's expansion into its own TPU-powered stack threatens to pull down GPU prices.

Nvidia reported a revenue growth of 105.8%, while Google Cloud revenue grew 82% due to demand from hyperscalers and enterprise AI infrastructure.

Alphabet still buys Nvidia systems while moving towards cheaper, application-specific chips, but this expansion could limit Nvidia's growth in the future.

Nvidia's gross margin is expected to bottom at 71%, which will be the first signal if Google's TPU expansion starts pulling prices lower.