AI Spend Set to Continue Powering Economic Growth into 2026
December 4, 2025
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3:29Now PlayingAI Spend Set to Continue Powering Economic Growth into 2026
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as posted by the channelJed Ellerbroek, Portfolio Manager at Argent Capital Management, discusses why AI skepticism and bubble talk is misplaced.
Alphabet Inc. investors are growing increasingly confident that the company’s semiconductors could represent a significant driver of future revenue for Google’s parent.
The success of Alphabet’s tensor processing unit, or TPU, chips is a primary reason for the stock’s 30% fourth-quarter rally, putting it among the best performers in the S&P 500 Index.
The TPUs were always seen as a major strength internally, accelerating growth for the company’s cloud-computing business. But there’s rising optimism that Alphabet could start selling the chips to third parties, creating a new revenue stream in a business that could ultimately be worth almost a trillion dollars.
Shares were down 1% on Thursday.
“If companies want to diversify away from Nvidia, TPUs are a good way to do it, and that means there’s a lot of reason to be optimistic,” said Gil Luria, head of technology research at DA Davidson. “The chip business could ultimately be worth more than Google Cloud. But even if it never sells a chip externally, the better chip means a better, more efficient cloud.”
Should Alphabet get serious about selling its TPUs, Luria estimates they could capture 20% of the artificial intelligence market over a few years, which would make it a roughly $900 billion business.
Alphabet did not return requests for a comment. A Nvidia spokesperson pointed to a recent comment by CEO Jensen Huang about the company’s competitive advantage: “As a company, you’re competing against teams. And there just aren’t that many teams in the world who are extraordinary at building these incredibly complicated things.”
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