Google Escalates Nvidia Rivalry With Two New TPUs as TPU Sales Seen Topping $135B by 2028

Google ($GOOGL) is adding two specialized versions of its tensor processing unit (TPU) AI chips, intensifying its challenge to Nvidia ($NVDA), Bloomberg reported. The TPU 8tx, built for secure computing, pairs with processors from AMD ($AMD) for chip-level encryption, while the TPU 8i Max puts two chips in one package for long-context AI work. Both are expected in 2027. Bloomberg Intelligence projects annual TPU-related sales above $135B by 2028, up from an estimated $12B in 2026.

The two new chips

Google chip chief Amin Vahdat said both are reconfigured versions of existing designs rather than entirely new silicon. They join the 8t and 8i announced in April, bringing Google's lineup to four TPU systems. Vahdat said the future belongs to specialization.

The case for TPUs

• Cost. Bloomberg Intelligence analyst Mandeep Singh estimates TPUs cost about 30% less than Nvidia GPUs while staying competitive on throughput, and says greater power efficiency in some workloads could lower costs further.
• Sales forecast. The more than $135B projection for 2028 is about 11 times the estimated $12B for 2026. It includes related hardware and software but excludes TPU usage through Google Cloud.
• Performance. Yahoo Finance reported that SemiAnalysis found Google's current Ironwood TPU delivers up to nearly three times the AI output per dollar of Nvidia's Blackwell when running AI agents, while Nvidia's top system still wins when raw speed matters most.

Who is buying

• Named users. Bloomberg lists Apple, Meta and Oracle as high-profile TPU customers. Oracle said its cloud customers will be able to use TPUs starting in 2027.
• Anthropic. A recent regulatory filing shows Anthropic has an option to buy up to $150B of TPUs between 2028 and 2031.
• OpenAI. Bloomberg News has reported that OpenAI plans to buy TPUs.
• Jump Trading. Its chief technology officer, Alex Davies, said the firm has thousands of TPUs but still mainly uses Nvidia for training.

Supply

Google said in its earnings report that every TPU it has available is already contracted to a customer. It has signed a deal with Marvell ($MRVL) that includes some TPU work, though details were limited, and reports say MediaTek is also involved. Vahdat declined to comment on either company's role. The agreement is part of Google's effort to expand its supply base beyond Broadcom ($AVGO), its TPU design partner. Bloomberg Intelligence analyst William Tong said Google is likely pursuing longer-term supply agreements to avoid bottlenecks.

Risks

• Data-center opposition. Singh estimates local resistance could trim projected 2027 AI infrastructure spending of $1.4T by 5% to 7%, or roughly $70B to $98B.
• Margins. Singh says Google's TPU profit margins are less robust than Nvidia's.
• Competition. Anthropic and OpenAI are developing in-house chips, and a startup founded by former TPU engineers is at least a year from finishing a long-context inference chip design.

Shares

Prices are as of about 11:50 a.m. ET Monday. Alphabet shares rose more than 2% in premarket trading after Bloomberg's report. Yahoo Finance attributed Nvidia's premarket drop of more than 5% to its board's investigation of CEO Jensen Huang, so the day's move in Nvidia cannot be tied to the TPU news alone.

What to watch

• 2027 launches. Whether the 8tx and 8i Max arrive on schedule and win regulated-industry customers.
• Customer commitments. Whether OpenAI signs a TPU deal and whether Anthropic exercises its option.
• Supply. How the Marvell arrangement and any longer-term supply agreements change Google's capacity.
• Nvidia earnings. Nvidia reports results on Nov. 17, with commentary on competition likely to draw attention.
• Related coverage. See our Nvidia investigation story, the Google and Crusoe report and the Anthropic IPO valuation report.

Sources: Bloomberg's Nov. 9 report on Google's new TPUs and Bloomberg Intelligence estimates, with additional reporting from Yahoo Finance and GuruFocus. Share prices are from Google Finance. This article is informational only and is not investment advice.