Google’s Chip Alliance Shake-Up Signals a New Phase in the AI Arms Race

Alphabet is rewriting its hardware playbook. The Google parent is in active negotiations with Marvell Technology to co-develop a next-generation Tensor Processing Unit (TPU) and a companion memory processor, marking a deliberate pivot away from its long-standing reliance on Broadcom. The design phase is slated to wrap up next year, with test production to follow. The move diversifies Alphabet’s chip supply chain at a moment when demand for custom AI silicon is exploding across the industry.

The timing is no coincidence. Alphabet’s shares closed Friday at €293.75 — exactly matching the 52-week high and representing a roughly 110% surge from the May 2025 trough. That rally has been fueled by a dual-track strategy: pouring billions into external AI startups while simultaneously deepening internal chip capabilities.

The $40 Billion Anthropic Calculus

On the investment front, Alphabet has committed up to $40 billion to AI startup Anthropic. The structure is tiered: $10 billion in immediate cash, with the remaining $30 billion contingent on Anthropic hitting specific performance milestones. In exchange, Google secures long-term access to computing capacity and the Claude model family — a bet that the startup’s technology will underpin future cloud services.

Analysts estimate Alphabet’s total capital expenditure for 2026 will reach roughly $183 billion, with the lion’s share funneled into computing power and AI infrastructure. That staggering figure underscores the scale of the arms race underway in Silicon Valley.

Earnings Expectations and Analyst Optimism

All eyes are now on Wednesday, April 29, when Alphabet reports first-quarter 2026 results after the US market close. The consensus calls for revenue between $107 billion and $110 billion, with earnings per share in the range of $2.63 to $2.76.

Should investors sell immediately? Or is it worth buying Alphabet?

Brian Pitz of BMO Capital has raised his price target from $400 to $410 ahead of the print, reiterating a buy rating. He cites sustained momentum at Google Cloud Platform and rising demand for Alphabet’s proprietary TPUs as key catalysts. Needham and Rosenblatt maintain targets between $389 and $400, implying double-digit upside from current levels.

The 50-day moving average sits at €265.32, roughly 11% below Friday’s close — a technical floor that could come into play if the earnings release triggers volatility.

Brussels Clouds the Outlook

Yet the regulatory headwinds are gathering force. The European Commission is reportedly pressuring Alphabet to allow rivals deeper integration of their AI assistants into the Android ecosystem, fearing that Google’s own AI tools structurally disadvantage third-party developers. This follows an April 2025 antitrust ruling targeting the company’s advertising business. Market observers view the EU’s latest push as the most significant medium-term threat to Alphabet’s ecosystem strategy.

Shareholder Showdown Ahead

The tension extends to corporate governance. Alphabet’s virtual annual general meeting is scheduled for June 5, 2026. The board is proposing to authorize an additional 200 million Class C shares. Meanwhile, 14 shareholder resolutions are on the docket, demanding stricter climate targets and enhanced oversight of AI development. Management has recommended voting against all 14 proposals, setting the stage for a contentious gathering.

For now, the market’s focus remains on Wednesday’s numbers — and whether Alphabet can deliver the kind of cloud growth that justifies its $185 billion-plus infrastructure bet.