Google, which not only supports its own cloud infrastructure with AI chips, made striking statements about its TPU sales. The company has doubled its rival.
Google's AI-focused chip investments are becoming an increasingly important revenue stream for the company's cloud business. Most recently, Google Cloud CEO Thomas Kurian stated that the company is twice as large as its biggest competitor in the Tensor Processing Unit (TPU) market.
Ambitious Statement for AI Chips
Kurian's statement came at the Communacopia conference hosted by Goldman Sachs. For the first time, when announcing its second-quarter results, Google included TPU sales to third-party customers in its cloud revenue. The company's second-quarter cloud revenue increased by 82 percent year-over-year, reaching $24.77 billion. This figure surpassed analysts' expectations of $22.46 billion.
So, how is Google growing its TPU business? Google generates TPU revenue through three different models. The first is customers leasing TPU processing power via Google Cloud. In the second model, the company sells TPU systems directly for customers to use in their own data centers. Anthropic is among the companies using this model.
The third model involves offering TPU systems through Google's cloud computing partnership with Blackstone. This way, Google is transforming its TPU hardware from being used solely within its own cloud infrastructure into a product that directly reaches customers. Google's latest product in this area is the eighth-generation TPU family, Ironwood, introduced in May.
Aiming to Exceed $100 Billion
Morgan Stanley analyst Brian Nowak significantly raised his expectations for Google's TPU sales. According to Nowak, Google Cloud could generate $27 billion in revenue from TPU sales outside of cloud leasing alone in 2027. Additionally, the analyst believes Google could sell 0.3 gigawatts of TPU systems in the second half of 2026, 3.2 gigawatts in 2027, and 4.2 gigawatts in 2028.
This forecast indicates that Google Cloud's TPU-related revenue could reach $84 billion in 2027 and $108 billion in 2028. Google's investments in AI infrastructure also support this growth. The company raised its capital expenditure forecast for 2026 to the $195-205 billion range. In the second quarter, capital expenditures increased by 100 percent year-over-year to $44.9 billion. Google's cloud unit's order backlog also rose to $514 billion in the second quarter, up from $460 billion in the first quarter.
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