Google is planning to offer its custom Tensor Processing Unit (TPU) chips to some customers for deployment in their own data centers.

The search and cloud giant revealed its plans to sell TPUs - rather than merely offering remote access to them via the Google Cloud platform - during its Q1 FY2026 earnings call yesterday, April 29.

CEO Sundar Pichai announced the move in his opening remarks, telling analysts: "As TPU demand grows from AI labs, capital markets firms, and high-performance computing applications will begin to deliver TPUs to a select group of customers in their own data centers in the hardware configuration to expand our addressable market opportunity."

No further details were divulged, but CFO Anat Ashkenazi later added that the TPU hardware agreements mentioned were reflected within Google's cloud backlog, which stands at $462bn. However, she did not specify the value or number of such deals beyond that "the majority of the backlog is still GCP agreements."

She added: "Now, as you think about the total backlog, just over half of it will convert to revenue in the next 24 months. And the TPU hardware sales, more specifically, we expect a small percentage of them to see coming through as revenue later this year and then the majority to be realized as revenue in 2027."

Pichai noted that the novel business strategy for the company's TPUs strays from the typical model of leasing access via its cloud platform, which can seemingly bring a greater return on investment as it allows Google to continue charging for access to the chips throughout the course of their lifespan.

Pichai argued that the company considers "what are we doing through Google Cloud to help our customers?"

"In that context, there are situations where it makes sense. For example, you take customers like capital markets, where they are running highly performing AI workloads. They wanted TPUs in their data centers ... and those trends are true across a diverse set of industries and in certain cases, frontier AI Labs too. And so we are opportunistic about it. But I do think we step back and think about it overall as the opportunity for Google Cloud.

"A lot of it is providing infrastructure through cloud, at times it is direct sales of TPU hardware to a select group of customers. But again, we do take a return on invested capital approach, and some of it helps us get more economies of scale, scale in our overall compute environment as well. So it helps us invest in the cutting edge, which we need to do for the next generation as well."

The company released its eighth-generation TPUs earlier this month, this time with two separate chips: one for inference workloads, and another for training.

In general, Google Cloud has seen a strong quarter. Revenue for the three-month period reached $20 billion for the first time, up 63 percent Year-on-Year (YoY). This is also up from the quarter prior, which saw revenue of $17.7bn, itself up 48 percent YoY.

Within this, Pichai said the company has doubled its number of $100 million to $1 billion deals YoY, signed multiple billion-dollar-plus deals, and seen existing customers deepening their "initial commitments by 45 percent."

The company's cloud backlog of $462 billion has nearly doubled sequentially, and Google anticipates it to convert to revenue within the next 24 months.

Cloud operating income, meanwhile, was $6.6 billion, having tripled YoY, and operating margin was 32.9 percent, up from 17.8 percent in the same quarter of 2025.

The quarter saw the company spending $35.7bn, up from $17.2bn YoY and from the prior quarter's $27.9bn. With this in mind, Google has revised its FY2026 capex guidance to between $180-190bn, up from the $175-185bn it was predicting during its Q4 FY2025 earnings call. This has been put down to its acquisition of Intersect Power that completed in March.

The company has also said it expects this to increase again in 2027, though little detail was provided. CFO Ashkenazi noted: "As you've seen us over the past several years, increased capex every year, and we have done it very thoughtfully to meet the demand that we are seeing both from external customers as well as demands across the organization. And you're seeing the proof point, the ROIC on that in terms of just the growth rate we're seeing, whether it's growth rate within search or certainly the cloud business, and the opportunity we have within the cloud backlog ... We'll provide more clarity in future earnings call about what that number will be."

Questions were also raised about the ongoing global supply chain issues, but CEO Pichai remained unfazed. "Obviously, we are working through a complicated supply chain environment, as you point out, and we are factoring that into any commentary we give.

"But I think the scale at which we are operating and our ability to work across all layers ... our supply chain partners see the strength of our diversified businesses and the demand we drive and our frontier technology and the investments all through the stack, I think they help us get into deeper partnerships all across the supply chain," he said, adding that the "economies of scale" point helps Google as well.

Following the earnings call, Google's shares have risen some 6.75 percent at the time of writing.