This article first appeared on GuruFocus.
Alphabet (GOOG, Financials) is drawing fresh attention as investors reassess the value of its custom AI chip strategy.
The company’s AI infrastructure plan is increasingly focused on its tensor processing units, or TPUs. The move might give Alphabet more say over costs, performance and long-term cloud economics as demand for AI processing ramps up.
Alphabet’s cloud business continues to be a big driver, with sales growing 63% year over year and backlog of roughly $460 billion. That suggests robust demand, but it also puts pressure on the corporation to turn those pledges into cash.
The larger debate is about spending. Alphabet is now guiding for 2026 capital expenditures of $180 billion to $190 billion to build out AI infrastructure.
The challenge for investors is whether that spending leads to lasting growth or margin squeeze. Google’s parent Alphabet’s next updates on cloud demand, TPU usage and AI returns will be essential to the stock’s next rise.
