Alphabet's TPU Chips Generated Revenue for the First Time Last Quarter. Here's Why That Line Item Matters More Than the Headline Cloud Number.
The technology giant just entered a business that could be worth $1 trillion per year within a decade.
Overview
There's no denying that Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) cloud computing results were the centerpiece of the company's recently posted second-quarter report. This business unit's revenue improved by a whopping 82% year over year, more than tripling its operating income as a result.
As encouraging as that is, however, perhaps it's not the most exciting leap Google's parent company made during the three months ending in June. Far more important was the fact that -- for the first time ever -- the company's so-called Tensor Processing Units (TPUs) were also directly monetized, officially putting Alphabet in the chipmaking business.
Details
Nvidia remains the leading designer of artificial intelligence processors. But several technology giants with the capabilities of designing their own, often in partnership with players like Broadcom -- are doing so. Alphabet's one of them. Its Tensor Processing Units were initially used strictly in-house, with capacity leased to clients via Google Cloud. But now, some are being shipped to data centers operated by third parties.
Source
Originally published at www.fool.com.