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Nvidia has established itself as the undisputed leader in artificial intelligence chips, selling large quantities of silicon to most of the world’s biggest tech companies en route to a $4.5 trillion market cap.

One of Nvidia’s key clients is Google, which has been loading up on the chipmaker’s graphics processing units, or GPUs, to try and keep pace with soaring demand for AI compute power in the cloud.

While there’s no sign that Google will be slowing its purchases of Nvidia GPUs, the internet giant is increasingly showing that it’s not just a buyer of high-powered silicon. It’s also a developer.

On Thursday, Google announced that its most powerful chip yet, called Ironwood, is being made widely available in the coming weeks. It’s the seventh generation of Google’s Tensor Processing Unit, or TPU, the company’s custom silicon that’s been in the works for more than a decade.

TPUs are application-specific integrated circuits, or ASICs, which play a crucial role in AI by providing highly specialized and efficient hardware for particular tasks. Google says Ironwood is designed to handle the heaviest AI workloads, from training large models to powering real-time chatbots and AI agents, and is more than four times faster than its predecessor. AI startup Anthropic plans to use up to 1 million of them to run its Claude model.

For Google, TPUs offer a competitive edge at a time when all the hyperscalers are rushing to build mammoth data centers, and AI processors can’t get manufactured fast enough to meet demand. Other cloud companies are taking a similar approach, but are well behind in their efforts.

Amazon Web Services made its first cloud AI chip, Inferentia, available to customers in 2019, followed by Trainium three years later. Microsoft didn’t announce its first custom AI chip, Maia, until the end of 2023.

“Of the ASIC players, Google’s the only one that’s really deployed this stuff in huge volumes,” said Stacy Rasgon, an analyst covering semiconductors at Bernstein. “For other big players, it takes a long time and a lot of effort and a lot of money. They’re the furthest along among the other hyperscalers.”

Originally trained for internal workloads, Google’s TPUs have been available to cloud customers since 2018. Of late, Nvidia has shown some level of concern. When OpenAI signed its first cloud contract with Google earlier this year, the announcement spurred Nvidia CEO Jensen Huang to initiate further talks with the AI startup and its CEO, Sam Altman, according to reporting by The Wall Street Journal.

Unlike Nvidia, Google isn’t selling its chips as hardware, but rather providing access to TPUs as a service through its cloud, which has emerged as one of the company’s big growth drivers. In its third-quarter earnings report last week, Google parent Alphabet said cloud revenue increased 34% from a year earlier to $15.15 billion, beating analyst estimates. The company ended the quarter with a business backlog of $155 billion.

“We are seeing substantial demand for our AI infrastructure products, including TPU-based and GPU-based solutions,” CEO Sundar Pichai said on the earnings call. “It is one of the key drivers of our growth over the past year, and I think on a going-forward basis, I think we continue to see very strong demand, and we are investing to meet that.”

Google doesn’t break out the size of its TPU business within its cloud segment. Analysts at D.A. Davidson estimated in September that a “standalone” business consisting of TPUs and Google’s DeepMind AI division could be valued at about $900 billion, up from an estimate of $717 billion in January. Alphabet’s current market cap is more than $3.4 trillion.

A Google spokesperson said in a statement that the company’s cloud business is seeing accelerating demand for TPUs as well as Nvidia’s processors, and has expanded its consumption of GPUs “to meet substantial customer demand.”

“Our approach is one of choice and synergy, not replacement,” the spokesperson said.

‘Tightly targeted’ chips

Customization is a major differentiator for Google. One critical advantage, analysts say, is the efficiency TPUs offer customers relative to competitive products and services.

“They’re really making chips that are very tightly targeted for their workloads that they expect to have,” said James Sanders, an analyst at Tech Insights.

Rasgon said that efficiency is going to become increasingly important because with all the infrastructure that’s being built, the “likely bottleneck probably isn’t chip supply, it’s probably power.”

On Tuesday, Google announced Project Suncatcher, which explores “how an interconnected network of solar-powered satellites, equipped with our Tensor Processing Unit (TPU) AI chips, could harness the full power of the Sun.”

As a part of the project, Google said it plans to launch two prototype solar-powered satellites carrying TPUs by early 2027.

“This approach would have tremendous potential for scale, and also minimizes impact on terrestrial resources,” the company said in the announcement. “That will test our hardware in orbit, laying the groundwork for a future era of massively-scaled computation in space.”

Dario Amodei, co-founder and chief executive officer of Anthropic, at the World Economic Forum in 2025.

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Google’s largest TPU deal on record landed late last month, when the company announced a massive expansion of its agreement with OpenAI rival Anthropic valued in the tens of billions of dollars. With the partnership, Google is expected to bring well over a gigawatt of AI compute capacity online in 2026.

“Anthropic’s choice to significantly expand its usage of TPUs reflects the strong price-performance and efficiency its teams have seen with TPUs for several years,” Google Cloud CEO Thomas Kurian said at the time of the announcement.

Google has invested $3 billion in Anthropic. And while Amazon remains Anthropic’s most deeply embedded cloud partner, Google is now providing the core infrastructure to support the next generation of Claude models.

“There is such demand for our models that I think the only way we would have been able to serve as much as we’ve been able to this year is this multi-chip strategy,” Anthropic Chief Product Officer Mike Krieger told CNBC.

That strategy spans TPUs, Amazon Trainium and Nvidia GPUs, allowing the company to optimize for cost, performance and redundancy. Krieger said Anthropic did a lot of up-front work to make sure its models can run equally well across the silicon providers.

“I’ve seen that investment pay off now that we’re able to come online with these massive data centers and meet customers where they are,” Krieger said.

Hefty spending is coming

Two months before the Anthropic deal, Google forged a six-year cloud agreement with Meta worth more than $10 billion, though it’s not clear how much of the arrangement includes use of TPUs. And while OpenAI said it will start using Google’s cloud as it diversifies away from Microsoft, the company told Reuters it’s not deploying GPUs.

Alphabet CFO Anat Ashkenazi attributed Google’s cloud momentum in the latest quarter to rising enterprise demand for Google’s full AI stack. The company said it signed more billion-dollar cloud deals in the first nine months of 2025 than in the previous two years combined.

“In GCP, we see strong demand for enterprise AI infrastructure, including TPUs and GPUs,” Ashkenazi said, adding that users are also flocking to the company’s latest Gemini offerings as well as services “such as cybersecurity and data analytics.”

Amazon, which reported 20% growth in its market-leading cloud infrastructure business last quarter, is expressing similar sentiment.

AWS CEO Matt Garman told CNBC in a recent interview that the company’s Trainium chip series is gaining momentum. He said “every Trainium 2 chip we land in our data centers today is getting sold and used,” and he promised further performance gains and efficiency improvements with Trainium 3.

Shareholders have shown a willingness to stomach hefty investments.

Google just raised the high end of its capital expenditures forecast for the year to $93 billion, up from prior guidance of $85 billion, with an even steeper ramp expected in 2026. The stock price soared 38% in the third quarter, its best performance for any period in 20 years, and is up another 17% in the fourth quarter.

Mizuho recently pointed to Google’s distinct cost and performance advantage with TPUs, noting that while the chips were originally built for internal use, Google is now winning external customers and bigger workloads.

Morgan Stanley analysts wrote in a report in June that while Nvidia’s GPUs will likely remain the dominant chip provider in AI, growing developer familiarity with TPUs could become a meaningful driver of Google Cloud growth.

And analysts at D.A. Davidson said in September that they see so much demand for TPUs that Google should consider selling the systems “externally to customers,” including frontier AI labs.

“We continue to believe that Google’s TPUs remain the best alternative to Nvidia, with the gap between the two closing significantly over the past 9-12 months,” they wrote. “During this time, we’ve seen growing positive sentiment around TPUs.”

WATCH: Amazon’s $11B data center goes live: Here’s an inside look

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CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit on the campus of Carnegie Mellon University in Pittsburgh, Pennsylvania on July 15, 2025.

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Palantir‘s head of global communications said Wednesday that the company’s political shift toward the Trump administration is “concerning.”

“I think it’s going to be challenging, as a lot of the company is moving pro-Trum-, you know, is moving in a certain direction,” communications chief Lisa Gordon said in an interview at The Information’s Women in Tech, Media and Finance summit.

“It’s concerning,” she said, while noting she’s a Democrat and previously worked on Walter Mondale’s presidential campaign.

President Ronald Reagan defeated Mondale, who served as vice president under Jimmy Carter, in the 1984 presidential election.

The Information later removed videos of Gordon’s remarks from its YouTube, X and Instagram pages.

Jessica Lessin, editor-in-chief of The Information, explained the decision in a note to CNBC.

“In this case, I felt I wasn’t clear enough that the videos were going to be shared, so I decided to take them down. The interview remains online as it always has been and you can read it here,” she said.

Other videos of panel discussions from the WTF Summit were still posted to the publication’s accounts.

Palantir CEO Alex Karp, who has given money to the campaigns of former Vice President Kamala Harris and President Joe Biden, has been outspoken about his recent support for President Donald Trump.

Gordon said at the summit that Karp’s “frustration with the Democrats” pushed him in a different direction politically.

Gordon told CNBC in an email that “Palantir welcomes diverse opinions.”

“The company has worked with four administrations and prides itself on supporting the nation no matter who’s in office,” she wrote.

Palantir, which is also a donor for the White House’s new ballroom that is under construction, just inked a contract with the U.S. Army worth up to $10 billion over the next decade.

The deal further cemented the company’s role in the U.S. government’s focus on cost efficiencies by using artificial intelligence tools.

Palantir also sponsored the president’s parade for the U.S. Army’s 250th birthday in June.

“So until recently, we’re pretty much on both sides, and so it hasn’t been that challenging,” Gordon said at the summit about Republicans and Democrats. “I’m just starting to navigate that now, moving forward, where I feel like there’s been a shift.”

The analytics firm co-founded by Peter Thiel, has helped U.S. Immigration and Customs Enforcement (ICE) with data used for the agency’s crackdown on immigration. Palantir won a $30 million contract to build the government a new platform called ImmigrationOS that allows the agency to “streamline” the identification and deportation of immigrants.

Gordon’s comments this week show how internal dynamics within the company are working as it undergoes this political movement. Gordon has worked at Palantir since 2009.

“You don’t get fired for having a different position, but you will leave if you’re not aligned, ultimately, like if you don’t support Israel,” Gordon said, referring to Karp’s staunch support of Israel amid the conflict in Gaza.

Palantir has supplied tools to Israel during the war in Gaza. Israel launched the campaign after Hamas-led fighters stormed through southern Israel, killing 1,200 people and bringing 251 hostages back to Gaza.

As of this week, Gaza health authorities said 68,000 people were confirmed killed in the Israeli strikes and thousands more were missing.

Karp has said that the company has lost employees and expects to lose more over his public support for Israel.

“What we try to focus on are the missions, not the personalities so much and and staying true to the work,” said Gordon.

WATCH: Palantir and Nvidia CEOs discuss their latest partnership

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