Alphabet Cloud 63% growth, begins direct TPU sales
Alphabet has begun selling TPUs directly to some customers, changing the growth drivers for Google Cloud. 2026 year 1quarter Google Cloud revenue rose 63% year over year.
Alphabet has begun selling its proprietary AI semiconductor, the Tensor Processing Unit (TPU), directly to some customers. Google developed the TPU for AI computing tasks. Sales are limited to some customers.
Google Cloud recorded a high growth rate alongside this change. 2026 year 1quarter Google Cloud revenue increased 63% year over year. Alphabet has presented its cloud business as a new growth business within the company.
Google Cloud's operating margin also improved. The operating margin rose from 19% to 33%. The operating margin is the share of revenue that remains with a company after costs are subtracted.
Alphabet’s overall results also increased. 2026year 1Total revenue for the quarter increased year over year by 22%. Operating income increased over the same period by 30%.
Direct TPU sales are how Alphabet sells its own AI semiconductors to cloud customers. Previously, they were mainly used internally at Google, and sales to external customers have now been added. Customers can use AI computing resources within Google Cloud.
This came as Alphabet took on a larger role in AI semiconductors and cloud computing. Alphabet operates Google Search, YouTube, and Google Cloud. The growth areas in this update are Google Cloud and TPUs.
Sources: The Motley Fool
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