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Custom chips are becoming an increasingly important growth engine for Google. Google Cloud revenue surged 48% in the fourth quarter, with management pointing to AI infrastructure \u2014 including its TPU lineup \u2014 as a key driver. The company introduced its first TPU back in 2016.
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Peers are moving in the same direction. Amazon, Microsoft and Meta Platforms are all expanding their custom silicon efforts to reduce reliance on costly Nvidia hardware. Meta rolled out its next-generation MTIA chips last month, while Tesla recently said its upcoming data center chips, designed for its Terafab Austin complex, will be built on Intel\u2019s advanced 14A process.<\/p>\n
Big Tech Chip Wars<\/p>\n
Morgan Stanley, in a December 2025 note, projected that Google is on track to ship 5 million TPUs in 2027 and 7 million in 2028, and that every 500,000 units sold externally could add about $13 billion in revenue, 11% to Google Cloud, and roughly 3% to Alphabet\u2019s bottom line.<\/p>\n
Earlier this month, Amazon disclosed that its chips business had reached an annualized revenue run rate of over $20 billion, doubling from the $10 billion reported alongside fourth-quarter results.<\/p>\n
2016\u20132020: Google leads (TPUs), Tesla builds FSD chip<\/p>\n
2020\u20132023: Amazon scales Trainium and Inferentia chips portfolio<\/p>\n
2023\u20132026: Microsoft and Meta aggressively enter with their custom chips<\/p>\n
2026: Major players are launching chips for specific AI workloads<\/p>\n
GOOGL\u2019s AI, Chip Momentum<\/p>\n
Google\u2019s latest TPUs reflect that split: the TPU 8t is designed for AI model training, while the TPU 8i is optimized for inference. Inference refers to the stage where a trained model applies what it has learned to make real-world predictions or decisions \u2014 essentially, what happens in the background when AI responds to user queries and performs tasks.<\/p>\n
Google\u00a0claims<\/a> that the 8th-gen chips offer three times faster AI model training, 80% better performance per dollar, and the ability to connect 1 million+ TPUs in a single cluster.<\/p>\n The TPU roadmap has helped drive gains in Google\u2019s stock, fueled largely by optimism around the Gemini 3 AI model, its AI partnership with Apple, and strong growth in the cloud unit.\u00a0GOOGL<\/a> was the top performer among the \u201cMagnificent Seven\u201d last year and is up 8.5% year to date, outpacing the S&P 500\u2019s 4.3% gain.<\/p>\n For updates and corrections, email newsroom[at]stocktwits[dot]com.<\/p>\n Read Next:\u00a0Why Did TXN Stock Jump Over 11% Overnight?<\/a><\/p>\n \u00a0<\/p>\n
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