Google Cloud CEO says TPU business is twice rivals’ size

Alphabet's ↘ 1.96% cloud division reported 82% year-over-year revenue growth in the second quarter, reaching $24.8 billion and widening its lead over rivals Amazon Amazon.com, Inc. ↘ 1.83% Web Services and Microsoft ↘ 0.49% Azure in growth rate. The results, disclosed in Alphabet's July earnings report, have taken on new weight after Google Cloud CEO Thomas Kurian used a Goldman Sachs The Goldman Sachs Group, Inc. ↘ 0.57% conference appearance on September 8 to claim the company's AI accelerator chip business is more than twice the size of any competing hyperscaler's.microsoft+3

A Quarter That Reshuffled the Leaderboard

Google Cloud's operating income more than tripled to $8.8 billion, translating to a 35.6% profit margin. The division was responsible for nearly half of Alphabet's total revenue increase in the quarter. Its backlog of committed but unrecognized revenue now stands at $514 billion, providing unusual visibility into future quarters.cryptobriefing+2

AWS, still the market leader by total revenue, grew 37% to $42.2 billion — its fastest growth in 18 quarters. Azure grew over 40% in the same period, with Azure annual revenue surpassing $100 billion for the first time. Both posted strong results by any conventional measure, but the gap in growth rates tells a different story about where new enterprise AI spending is flowing.cnbc+3

Kurian's TPU Gambit

Speaking at Goldman Sachs's Communacopia + Technology Conference on Monday, Kurian said Google Cloud's Tensor Processing Unit business is "more than twice as large as the next biggest hyperscaler," a claim Investor's Business Daily News Corp ↘ 0.48% interpreted as directed at Amazon's Trainium and Microsoft's Maia chips. Google originally developed TPUs for internal use but this year began selling them externally to companies including Anthropic and Meta ↗ 6.88%, and through a joint venture with Blackstone ↘ 3.48%.biz.chosun+2

Morgan Stanley ↘ 0.18% estimated last month that Google Cloud's first-party TPU revenue could reach $84 billion next year and $108 billion in 2028.biz.chosun

What It Means for the Cloud Landscape

Alphabet raised its full-year capital expenditure guidance to $195–$205 billion for 2026, underscoring management's conviction that AI infrastructure spending will pay off. Google Cloud's market share has climbed to roughly 15% of cloud infrastructure spending, still well behind AWS but on a trajectory that has narrowed the gap.biztechweekly+2

For AWS and Azure investors, the question is whether Google's acceleration reflects a temporary surge from TPU sales — which were newly included in cloud revenue starting in Q2 — or a durable shift in enterprise AI workload allocation. With $514 billion in committed backlog and a chip business Kurian says dwarfs the competition, Google Cloud is making the case that the answer is the latter.