Alphabet's AI chip is hailed as a "unique secret weapon" and could generate nearly a trillion dollars in revenue for them.

Investors in Alphabet are increasingly confident that the company's chip business will become a significant growth engine for its future revenue. The success of Alphabet's Tensor Processing Unit (TPU) chip was a major reason for its stock price surging 31% in the fourth quarter, ranking it tenth among S&P 500 components. TPUs have always been considered a core advantage within the company, accelerating the growth of its cloud computing business. However, the market is increasingly optimistic about Alphabet's prospects for selling the chip to third parties, potentially opening up a new revenue stream that could ultimately be worth nearly a trillion dollars. "If a company wants to diversify beyond NVIDIA, TPU is a good way to go, which means there is plenty of reason to be optimistic," said Gil Luria, director of technology research at DA Davidson. "The ultimate value of this chip business could exceed Google Cloud. But even if they don't sell the chip externally, a higher quality chip can still bring better and more efficient cloud services."