Google Pushes TPUs Beyond Its Own Data Centers With Oracle Deal

Google is taking its custom AI chips outside its own walls. A day before its third-quarter earnings report, Alphabet said Oracle will offer Google's tensor processing units, or TPUs - the chips the company has developed since 2013. According to the announcement, it marks the first time customers can access TPUs outside Google's infrastructure, following Google's move earlier in the second quarter to open TPUs to outside data centers.

The push is led by cloud boss Thomas Kurian, who spent more than 20 years at Oracle before joining Google in late 2018. Analysts expect Google Cloud revenue to jump about 90% from a year earlier, after 82% growth in the second quarter. "Google was great at doing its own thing, but it was never able to serve customers," said Uday Cheruvu of Harding Loevner, which owns Alphabet shares. "That mindset has changed."

Estimates for the TPU business vary widely but all point to growth. TD Cowen models $9.4 billion in TPU sales for the second half of this year and $62.5 billion for 2027, while Wells Fargo expects about $9 billion in third-quarter sales and $99 billion next year. CFO Anat Ashkenazi said in July that only a small portion of TPU revenue from existing agreements will be recognized this year, with the "vast majority" coming in 2027. Google declined comment.

Google's biggest TPU customer is also one of its top AI competitors. Anthropic, whose Claude models compete with Gemini, agreed last October to use up to 1 million TPUs in a deal worth tens of billions of dollars. OpenAI is also planning to buy TPUs from Google, CNBC reported, citing The Information. This week, Broadcom detailed a $63 billion vehicle backed by Blackstone and three big banks that will buy TPUs and networking gear and lease them to Anthropic for five years.

Source: CNBC