Alphabet has begun selling its custom TPU systems directly to enterprise customers as of Q2 2026. While the company has started recognizing revenue from these sales, the bulk of the income is projected for 2027. Analysts anticipate that TPU sales could generate tens of billions of dollars between 2027 and 2028.
Growth in the cloud sector remains significant, with Google Cloud revenue rising 82% year-over-year to $24,8 billion in Q2 2026. The company reports a backlog of contracted but undelivered revenue exceeding $514 billion. To support this expansion, Alphabet spent $44,9 billion on capital expenditures in the second quarter alone.
The company's full-year 2026 capital expenditure guidance has been raised to a range of $195 billion to $205 billion. This high level of investment resulted in a negative free cash flow of approximately $5,9 billion for the quarter.
Production is currently constrained by packaging limitations at TSMC, specifically regarding CoWoS technology, which is sold out through 2026 and into 2027. To mitigate supply chain risks, Alphabet is reportedly exploring a potential partnership with Samsung for the production of future TPU generations.
