This article first appeared on GuruFocus.
Alphabet Inc. (GOOGL, Financials) could be a lot bigger AI chip business than investors believe. Morgan Stanley claimed that Google might make around $200 billion in income linked to its tensor processing units over the next several years. That’s a lot of money, even for Alphabet.Google has spent years building TPUs to run AI workloads in its own data centers. The difference now is the size of the potential as demand for AI computing continues to explode and corporations seek alternatives to Nvidia’s GPUs.If an increasing share of those workloads migrate to Google’s bespoke hardware, TPUs might be so much more than an internal cost-saving tool. They might be a big income engine directly linked to the growth of Google Cloud and AI infrastructure.This also gives Alphabet another method to monetize the AI growth outside search, advertising and its Gemini AI. The big question is how fast Google can spread TPU use outside its own ecosystem and whether clients are ready to move more workloads to bespoke chips.If Morgan Stanley’s prediction is anywhere close to being right, TPUs might be among Alphabet’s biggest AI companies.
