Alphabet's TPU Chips Generated Revenue for the First Time Last Quarter. Here's Why That Line Item Matters More Than the Headline Cloud Number.

Alphabet (GOOG, GOOGL) raised its 2026 capital expenditure guidance to $195B-$205B, up from $175B-$185B, primarily for data centers. Google Cloud revenue grew 82% in Q2 with a 36% operating margin, driven by AI and cloud computing demand. The company is investing heavily in cloud infrastructure to diversify from advertising and capitalize on AI growth.

Marvell (MRVL) agreed to develop custom silicon for Google (GOOG, GOOGL), receiving a warrant for 59M shares at $206.58. Marvell rose 7%, while Broadcom (AVGO) fell 5%. Google gains a stake in Marvell's growth, diversifying Marvell's customer base. Broadcom's relationship with Google remains intact, but investors reacted negatively to potential share loss.

Alphabet (GOOGL) issued its first listed income securities, GOOGM and GOOGN, offering a 6.25% annual coupon. These mandatory convertible preferred stocks will automatically convert to common stock in 2029. GOOGM closed at $49.03 on August 14, 2026, with a quarterly dividend of $0.60 per share. The securities have a conversion cap limiting upside potential while absorbing full downside risk. Alphabet's Q2 2026 revenue grew 24.23% to $119.80 billion, with Google Cloud up 82% to $24.77 billion.

Marvell Technology granted Google a warrant to potentially acquire a $12.18B stake, part of a deal to develop custom AI chips. Marvell shares rose 11% premarket, while Broadcom fell 3%. The agreement highlights growing demand for custom AI hardware, reducing reliance on Nvidia's GPUs.

Marvell (NASDAQ:MRVL) offered Alphabet (NASDAQ:GOOG) a warrant for up to 58.97 million shares, worth about $12.2 billion, contingent on Google's future purchases of Marvell's custom silicon through 2033. The shares vest upon reaching revenue milestones, aligning incentives. Marvell's role in Google's AI infrastructure is expanding, addressing bottlenecks in AI models and inference workloads.

Berkshire Hathaway increased its investment in Alphabet, making it its third-largest holding at $36.6 billion. Alphabet's stock rose 70% in the past year, and Berkshire's investment includes a $10 billion private placement. Alphabet's capex surged, leading to negative free cash flow, but it maintains strong operating margins and a robust balance sheet.