Alphabet's TPUs emerge as cost-competitive AI chips challenging Nvidia's GPU dominance

Nvidia delivered Q1 results with sales surge of 85% and adjusted gross margins around 75%, yet its stock dipped nearly 2% post-earnings; the company is telegraphing another blockbuster result for Q2.

Alphabet's TPUs (custom AI processors) are now in their eighth generation and are becoming cost-effective enough to disrupt GPUs; Google is opening a new earnings stream by sharing TPU innovations with third parties.

The overlap between the two companies is growing as both move into AI chips, platforms (autonomous driving, world models, applied AI), and robotics; analysts note each firm may win in its respective corner depending on whether customers prioritize frontier-level compute power or efficiency and cost savings.