Google’s seventh-generation Tensor Processing Unit, codenamed Ironwood, is slated for general availability “soon,” chief executive Sundar Pichai told investors. The chip, along with the Trillium architecture introduced earlier in the year, is designed to lower energy consumption and integrate seamlessly with Google’s software stack. Pichai added that startup Anthropic plans to access up to one million TPUs, illustrating interest from major AI developers.
Alphabet’s chips remain less flexible than Nvidia’s Blackwell graphics processors, yet their lower price and integration with Google Cloud appeal to customers aiming to reduce costs. According to filings with the U.S. Securities and Exchange Commission, Alphabet employed 190,167 people at the end of the quarter and commands a market capitalization of roughly $3.4 trillion.
Gemini rebounds from Bard’s missteps
The launch of OpenAI’s ChatGPT in 2022 ignited widespread interest in conversational AI. Alphabet’s initial response, Bard, failed to gain traction, but its successor Gemini now ranks among the most downloaded applications in Apple’s App Store, occasionally surpassing ChatGPT. Pichai reported more than 650 million monthly active users, while Bank of America estimates 75 million daily active users across Gemini and Google’s AI Mode.
Gemini benefits from tight integration with both the Chrome browser and the Android mobile operating system. Chrome maintains about 3.5 billion users worldwide, and Google Search retains nearly 90 percent global market share, giving Alphabet a substantial distribution advantage as AI adoption broadens.
Search revenue holds firm
Analysts have questioned whether AI chatbots could erode traditional search advertising, Alphabet’s primary revenue source. The latest figures indicate stability: search revenue grew 15 percent year over year in the third quarter, exceeding the consensus estimate of 11 percent. Paid clicks increased 7 percent compared with 4 percent in the prior quarter, suggesting that AI tools may be stimulating, rather than cannibalizing, search activity.
Updated earnings outlook
Reflecting the stronger operating trends, Bank of America raised its earnings forecast for Alphabet by 4 percent for 2026 and 7 percent for 2027. The firm’s research note states that Alphabet is “well positioned for AI with a leading large language model, proprietary TPU technology and a massive user base.” While acknowledging continued competition from OpenAI, the bank argues that multiple companies can benefit as AI capabilities expand.
Key performance metrics
- Employees: 190,167
- Revenue: $102.35 billion
- Net income: $34.9 billion
- Earnings per share: $2.87
- Stock price at report time: $282
- New Bank of America target: $335
- Market capitalization: $3.4 trillion
Beyond the headline numbers, Bank of America emphasized Alphabet’s expanding backlog as evidence of forward visibility. The cloud unit’s 23.7 percent operating margin in the third quarter, up from 17.8 percent in the first quarter, reflects improving scale and increased usage of internal silicon.
Management signaled additional investment in data centers and networking equipment to meet customer demand. These expenditures are aimed at supporting both external clients and Alphabet’s own AI services as usage rises.
With fresh guidance in place, investors will watch how well Alphabet balances capital spending with profitability while fending off competition from hyperscale rivals Amazon Web Services and Microsoft Azure. For now, the latest figures and an upgraded share-price target suggest that Wall Street views the company’s AI and cloud strategy as gaining traction.
Crédito da imagem: Justin Sullivan/Getty Images
