Alphabet-led Google is reportedly expanding sales of its custom tensor processing units (TPUs) to independent cloud providers, according to The Information. The move comes as Wall Street analysts trimmed price targets on Alphabet and Meta Platforms stocks ahead of second-quarter earnings. UBS lowered its price target on Alphabet to $400 from $410 while maintaining a Neutral rating. The reported TPU expansion aims to challenge Nvidia's dominance in AI hardware by offering customers more stable performance and simpler networking than GPU-based systems.
Google Expands TPU Sales to Independent Cloud Providers
According to The Information, Google's tensor processing units have been housed almost entirely in Google's own facilities and rented out only through Google Cloud. The company is now trying to sell its custom AI chips directly to neoclouds, young companies built around renting out Nvidia GPUs. One of Google's targets was Nscale, a two-year-old neocloud in which Nvidia is a major investor and preferred shareholder. Google's pitch centers around offering more stable performance and simpler server networking than with GPUs, particularly as Nvidia's newer Grace Blackwell and upcoming Vera Rubin systems have caused deployment headaches for buyers. Nvidia reportedly caught wind of the Google talks and discussed financial incentives with Nscale that one source said were aimed at keeping the neocloud away from TPUs, a characterization Nscale disputed.
The move to increase adoption of its TPUs could also help Google secure a larger share of production from Taiwan Semiconductor Manufacturing Company. Currently, Nvidia is TSMC's biggest customer, accounting for a large share of its manufacturing capacity.
UBS Cuts Price Targets on Alphabet and Meta Stocks
UBS on Monday cut its price target on Alphabet to $400 from $410 and kept a Neutral rating on the stock. The bank also lowered the price target on Meta's stock to $766 from $865 while maintaining a Buy rating. Both moves were tied to the companies' upcoming second-quarter earnings.
Morgan Stanley struck a more constructive long-term view on AI investment, raising its capital expenditure forecasts for Meta and Amazon. The bank now expects hyperscaler AI spending to reach approximately $1.2 trillion in 2027 and $1.4 trillion in 2028, reflecting continued investment in AI infrastructure despite near-term valuation concerns.
GOOG stock edged 0.5% lower in midday trade on Monday amid a broader market sell-off following rising oil prices after tensions between the U.S. and Iran escalated over the weekend. NVDA's stock fell nearly 3% in midday trade.
Alphabet Scheduled to Report Q2 Earnings on July 22
Alphabet is scheduled to report its second-quarter earnings on July 22. Koyfin data showed Wall Street is expecting the tech giant to report earnings of $2.90 per share on revenue of $116.8 billion. GOOG's stock has gained over 10% this year and nearly doubled over the past 12 months.
FAQ
What did UBS do to Alphabet's stock price target?
UBS on Monday cut its price target on Alphabet to $400 from $410 and kept a Neutral rating on the stock. The adjustment was tied to the company's upcoming second-quarter earnings.
When is Alphabet scheduled to report Q2 earnings?
Alphabet is scheduled to report its second-quarter earnings on July 22. Wall Street expects the company to report earnings of $2.90 per share on revenue of $116.8 billion.
What is Google reportedly doing with its TPU chips?
According to The Information, Google is expanding sales of its custom tensor processing units to independent cloud providers, moving beyond exclusive use within Google Cloud. The company is targeting neoclouds like Nscale and pitching TPUs as offering more stable performance and simpler networking than GPU-based systems.
