Google's latest earnings report shows that its inventory has blown up over the past 12 months, from $628 million at the end of June 2025 to $7.74 billion at the end of June 2026.

According to the company's 10Q filing, its inventory consists "primarily of hardware related to TPU systems for sale to enterprise customers and devices," including "raw material components purchased directly from our suppliers; work-in-process inventory undergoing conversion into finished products; and fully assembled finished goods. Inventories are stated at the lower of cost or net realizable value."

While it does not provide an exact idea of the number of custom AI chips in Google's stash, it does demonstrate the extent to which the company has been seeking to scale up as it moves to selling the TPUs directly to customers, rather than simply leasing access via Google Cloud.

Google revealed plans to sell its TPUs to a "select group of customers" back in April 2026, and the following month announced a joint venture with Blackstone to create a new platform using the silicon.

The company is including the sales of TPUs within its cloud segment revenue, which was $24.8bn for Q2 FY2026, up 82 percent Year-on-Year (YoY) and an increase on the previous quarter's $20bn.

During the earnings call, CEO Sundar Pichai said that the proportion of that revenue linked to TPU sales was a "small amount" for this quarter, but that they expect it to "continue to ramp up throughout 2026, [and] then you'll see the vast majority of the revenue from that agreement come through in 2027."

Similarly, the company's cloud backlog reached $514bn, increasing by more than $50bn sequentially. Pichai similarly stated that the "vast majority of the $514bn of cloud backlog is the GCP agreements, but the TPU system sales are reflected in that backlog. We started building inventory to be able to sell those systems, so you see that impact on the cash from operations because we built ahead ... once we start delivering the sales, generally that's when we start recognizing revenue."

The 10Q filing notes that "product sales revenue from hardware, net of estimated allowances for returns, and software is recognized generally when control of the hardware is transferred to the customer," suggesting that deliveries have thus far been proportionally small.

Beyond the JV with Blackstone, it is unclear which "select customers" have contracts with Google to purchase the custom hardware. Neoclouds, including Nebius, Lambda, and Coreweave, previously said they weren't in the market for the AI chips.

Also during the earnings call, Google upped its capex expectations for the year. The company said it now expects to spend between $195 and $205bn, up from its last-quarter prediction of $180-190bn, and anticipates 2027 to be even higher. The company's capex hit $91.45bn last year, up from $52.5bn the year before.