GOOGL Reportedly Expands TPU Sales To Battle Nvidia Amid Wall Street Price Target Cuts On Big Tech Ahead Of Q2 Earnings

• Google is reportedly expanding sales of its custom TPUs to independent cloud providers, moving beyond exclusive use within Google Cloud.
• According to The Information, Google is pitching TPUs as offering more stable performance and simpler networking than competing GPU-based systems.
• The reported expansion comes while Wall Street reassesses AI spending, with UBS lowering price targets on Alphabet and Meta ahead of earnings.

Alphabet-led (GOOG, GOOGL) Google is reportedly expanding efforts to sell its custom AI chips to independent cloud providers as a direct challenge to Nvidia's (NVDA) dominance in AI hardware.

The report from The Information comes as Wall Street has trimmed price targets on Alphabet, Meta Platforms (META) and Amazon (AMZN),  even as other analysts raise long-term AI capex forecasts across the sector.

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. The tech-heavy Nasdaq-100 took the biggest hit compared to the S&P 500 and Dow Jones. The Invesco QQQ Trust Series 1 (QQQ), which tracks the tech index, fell as much as 1.8% in midday trade.

On Stocktwits, retail sentiment around Alphabet’s shares trended in ‘bearish’ territory over the past day. Meanwhile, NVDA’s stock fell nearly 3% in midday trade, with retail sentiment trending in ‘extremely bullish’ territory over the past day. 

Google Takes TPU Push Beyond Google Cloud

According to The Information, Google's tensor processing units (TPUs) have so far been housed almost entirely in Google's own facilities and rented out only through Google Cloud. Now the company is trying to sell its custom AI chips directly to "neoclouds," young companies built around renting out Nvidia GPUs. 

It said that one of Google’s targets was Nscale, a two-year-old neocloud in which Nvidia is a major investor and preferred shareholder. The report added that 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.

However, 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 report also said that the move to increase the adoption of its TPUs could also be a move to getting a larger share of production from the Taiwan Semiconductor Manufacturing Company (TSMC). Currently, Nvidia is TSMC’s biggest customer, accounting for a large share of its manufacturing capacity. Higher demand for TPUs could strengthen Google’s big for getting more of a share in TSMC production.

Wall Street Reassesses AI Infrastructure Spending

The reported TPU expansion comes amid a broader reassessment of AI infrastructure spending by Wall Street.

UBS on Monday cut its price target on Alphabet to $400 from $410 and kept a ‘Neutral’ rating on GOOGL’s stock. It 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 (Q2) earnings. 

At the same time, Morgan Stanley struck a more constructive long-term view on AI investment, raising its capital expenditure forecasts for Meta and Amazon (AMZN). The bank now expects hyperscaler AI spending to reach roughly $1.2 trillion in 2027 and $1.4 trillion in 2028, reflecting continued investment in AI infrastructure despite near-term valuation concerns.

Alphabet is scheduled to report its Q2 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. 

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