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Google will sell TPUs through Oracle Cloud, CNBC reports
CNBC reported Wednesday that Alphabet said Oracle will offer Google tensor processing units, the first time customers can access TPUs outside Google's own infrastructure.
Alphabet said Tuesday that Oracle will offer Google tensor processing units, giving customers TPU access outside Google's own infrastructure for the first time, CNBC reported Wednesday1.
The report, published a day before Alphabet's third-quarter earnings, said Google began selling TPUs to outside customers in the second quarter of this year and is using partners to expand that business against Nvidia in AI chips1.
Google Cloud chief Thomas Kurian spent more than 20 years at Oracle before joining Google in 2018, CNBC noted1.
Analysts expect Google Cloud revenue to rise about 90% from a year earlier after 82% growth in the second quarter, with TPUs contributing, the report said1.
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, according to CNBC1.
Chief financial officer Anat Ashkenazi said on the July earnings call that only a small portion of TPU revenue from existing agreements will be recognized this year, with the vast majority in 2027, CNBC reported1.
Second-quarter cloud revenue was $25 billion, trailing Amazon Web Services at $42 billion and Microsoft Azure at $29 billion, the account said1.
At a Goldman Sachs conference in September, Kurian said Google's AI servers pay for themselves in under two years, and servers running its own silicon reach payback in roughly half that time, according to CNBC1. "It's because we can optimize that whole stack," Kurian said, as quoted by CNBC1.
SemiAnalysis estimates Google's latest Ironwood TPU costs about 44% less to own and operate than an Nvidia GB200 server, CNBC reported1.
TD Cowen estimates a 20% operating margin on TPU sales, compared with an overall cloud margin of about 35% last quarter, the report said. Google declined comment, CNBC said1.
Anthropic agreed last October to use up to 1 million TPUs in a deal worth tens of billions of dollars, CNBC reported, and said this week Broadcom detailed a $63 billion vehicle backed by Blackstone and three banks that will buy TPUs and networking gear from Broadcom and lease them to Anthropic for five years1.
OpenAI is also planning to buy TPUs from Google, CNBC said it confirmed after The Information first reported those intentions Tuesday1.
