I Can’t Stop Buying Alphabet Because of This Emerging Massive AI Cost Advantage

2 months ago 32

Alex Sirois

Thu, July 16, 2026 astatine 8:50 AM CDT 4 min read

Quick Read

Google is the lone hyperscaler moving AI inference connected its ain silicon, sidestepping the 75% gross borderline toll each rival pays NVIDIA per token.
Sundar Pichai confirmed Google chopped halfway AI effect costs 30% portion Cloud gross surged 63% and operating borderline astir doubled to 33%.
GOOGL trades astatine a guardant P/E of 25 versus NVDA's 43, with a dividend output of 0.24% compared to NVDA's near-zero 0.019%.
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I support hitting the bargain fastener connected Alphabet (NASDAQ:GOOGL), and the crushed is simple. It is the lone hyperscaler connected the satellite that runs AI inference without paying idiosyncratic else's borderline to bash it.

An aerial, futuristic depiction of a ample Google information halfway analyzable astatine night, glowing with bluish and greenish lights. Stylized, luminous machine chips labeled 'TPUs' travel retired from the main Google gathering on a acheronian road. Further on the road, a 'MARGIN TOLL' gross is visible. A large, floating holographic show successful the precocious close country shows the substance 'GOOGLE AI COST ADVANTAGE - TPU EFFICIENCY'.

Every rival renting NVIDIA (NASDAQ:NVDA) GPUs is handing implicit a 75.0% gross borderline toll connected each token processed. Google runs its ain silicon, its ain models, and its ain distribution. The receipts backmost it up.

The Cost Advantage Shows Up successful the Filings

On the Q1 2026 call, Sundar Pichai said the caller TPU 8i delivers "80% amended show per dollar than the anterior generation" connected inference, and that aft upgrading Search to Gemini 3, Google "reduced the outgo of halfway AI responses by much than 30%". Trillium (v6) delivers astir 4.7x amended performance-per-dollar and a 67% simplification successful powerfulness depletion per token compared to equivalent NVIDIA clusters, which is wherefore Midjourney slashed its monthly inference measure by 65% overnight aft moving from Nvidia GPUs to Google TPU v6e pods. Anthropic, Character.AI, and Perplexity are moving monolithic portions of their scaling infrastructure connected TPUs for the aforesaid reason.

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The economics are landing connected the income statement. Google Cloud gross grew 63% to $20.03 cardinal successful Q1, backlog astir doubled quarter-on-quarter to implicit $460 billion, and Cloud operating borderline expanded from 17.8% successful the archetypal 4th of past twelvemonth to 32.9%. Consolidated operating borderline reached 36.1% with operating income up 30% YoY. First-party Gemini models present process much than 16 cardinal tokens per minute… up from 10 cardinal past quarter.

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