The Next Phase of the Artificial Intelligence Race Could Benefit This Company Most
Key Points
- Alphabet could sell up to 1 million AI chips by 2027.
- Meta may be interested in spending billions of dollars for Alphabet's processors.
- Companies will increasingly rely on AI agents in software, and Alphabet is already on the cutting edge.
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No one knows exactly what the next phase of artificial intelligence (AI) will be, but early indicators suggest a shift towards more diverse AI hardware and software that works well with existing tech tools.
These trends could define the next phase of AI, as companies strive to position themselves as leaders in a competitive landscape.
While many companies will benefit, Alphabet is uniquely positioned to capitalize on these trends.
Alphabet could sell 1 million AI chips by 2027
Alphabet has developed its own AI processors, called Tensor Processing Units (TPUs), which it has used in its data centers for AI training.
Now, Meta Platforms may be interested in buying these processors for its own data centers, potentially for billions of dollars.
This is significant, even with Nvidia dominating the AI processor market with an estimated 90% of the data center market running graphics processing units (GPUs).
Nvidia's nervousness about Alphabet's chip prospects is evident in its public statements.
Analysts at Morgan Stanley predict that Alphabet could sell 500,000 to 1 million TPUs by 2027, with a positive impact on cloud sales and earnings per share.
The other side of the AI coin
Alphabet's AI opportunity extends beyond hardware. The AI market is increasingly software-centric, with AI agents emerging as a key focus area.
Alphabet's chatbot, Gemini 3, is a formidable competitor to OpenAI's ChatGPT, with 'PhD-level' reasoning capabilities and the ability to solve complex problems.
Gemini 3 has 650 million active users and is integrated into Google Search, with over 2 billion monthly users.
Alphabet's AI services are driving sales growth, with Google Cloud revenue rising 34% in the third quarter to $15.2 billion.
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