Alphabet stock rises as TPU demand outruns TSMC’s supply

Alphabet shares popped on Wednesday. The catalyst was an unusual problem: the company’s custom AI chips are in such demand that its manufacturing partner can’t keep up. From cloud rental to chip vendor For years, TPUs lived mostly inside Google’s own data centers. Outside customers could rent time on them through Google Cloud, but they couldn’t take one home. That changed in Q2 2026. Alphabet began selling TPU systems directly to select enterprise customers for use in their own data centers, and it started recognizing revenue from those sales during the quarter. The catch is timing. Most of the direct TPU revenue is expected to land in 2027, not this year, so the current quarter shows the start of the business rather than its full weight. Analysts have raised their price targets on Alphabet anyway. Some estimate TPU sales could bring in tens of billions of dollars by the 2027-2028 window. The numbers behind the enthusiasm Google Cloud grew revenue 82% year over year in Q2 2026, reaching roughly $24.8B for the quarter. The backlog is even more eye-catching. Google Cloud’s contracted but not yet delivered revenue exceeds $514B. Building that capacity is expensive. Alphabet spent $44....