OpenAI plans to buy Google's tensor processing units (TPUs), The Information reported.

  • Analysts expect Q3 revenue to increase 25% and adjusted profit to rise 3%.
  • Investors will focus on cloud growth and potential updates to the CapEx outlook.
  • Retail sentiment for GOOGL was ‘bullish’ on Tuesday.

Alphabet (GOOGL) shares rose 1% in overnight trading late on Tuesday after a report said OpenAI was considering buying its AI chips, even as investors positioned ahead of the search giant’s quarterly results due the next day.

OpenAI plans to buy Google's tensor processing units (TPUs), The Information reported, citing a person familiar with the matter, though it did not disclose financial terms or other details.

The potential deal would deepen ties between OpenAI and Alphabet. Last week, OpenAI ​said it would make its frontier AI models available through Google Cloud. Last year, Reuters reported that OpenAI had begun renting AI chips from Google to reduce its reliance on Nvidia and Microsoft.

Custom Chips Market Expands

Google provides TPUs through Google Cloud to customers including Anthropic, and has announced plans to supply them to Oracle and a new Blackstone joint venture.

OpenAI, a major buyer of Nvidia chips, unveiled its first custom AI chip in June, designed with Broadcom, and said it plans to deploy the processor by the end of this year as part of a multi-generation chip program.

Alphabet’s Q3 Report In Focus 

The report comes ahead of Alphabet’s third-quarter report, due after market hours on Wednesday, when investors closely watch its cloud and capital expenditure updates.

Analysts expect revenue to rise 25% to $127.83 billion and adjusted profit to rise 3% to $2.97 per share, according to Koyfin. Google Cloud’s growth would be benchmarked against the record 82% year-over-year growth in the unit in the second quarter.

Analyst, Retail View On GOOGL

Alphabet received a mixed response from Wall Street ahead of the report, with Citizens JMP cutting its price target to $450 from $515 last week, while maintaining a ‘Market Outperform’ rating. The research flagged potential challenges from tougher Search comparisons and competition from AI agents.

Evercore ISI and Truist Securities maintained ‘Buy’ ratings, citing expectations of continued growth in Search, YouTube, and Google Cloud.

On Stocktwits, the retail sentiment for GOOGL was ‘bullish’ as of late Tuesday, with the ticker trending at the time of writing. “GOOGL overnight pump news for open AI chips. Can cross 350 if earnings top,” a trader wrote.

GOOGL stock closed at $320.58 on Tuesday and is up 2.6% year to date.

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