If TPU's are really that good why on earth would google not sell them. People say its better to rent, but how can that be true when you look at the value of nvidia.
On the GPU side - One way to look at it is lets just ignore whether you're selling chips. Let's just look at where compute is done - because Google let's you rent time on the TPUs so if they're really great people will just choose to rent time on them. How much time is being rented on TPUs in the cloud vs. Nvidia GPUs? Google's TPUs are not a market leader, they're probably not even significant market share. Pretend Google decided to sell TPUs tomorrow - are many people who weren't choosing to rent TPUs going to decide to buy them? No. There's an element of interoperability and supply chain etc. etc. but I think the core of it is a full ML product the TPU isn't anywhere close to the Nvidia GPUs.
The only way the current situation makes sense is if your last sentence is true, which is what i'm getting at. Either TPUs are significantly behind Nvidia chips, or google is choosing not to add like a trillion dollars of market cap to their business its really one or the other.
Right now if Google can earn more from using their TPUs than they would selling them (ie profitably utilize them) they would be crazy to sell them.
Companies are valued not on their present value, but the net present value of their future earnings. So the big multiple implies that there is much more revenue growth potential here. For example, NVidia has Cuda, Google doesn’t have anything as good for third party users. Maybe the market is pricing in that Google doesn’t have a good path to manufacture and sell these chips externally, while NVidia has room to grow into every 1GW datacenter that’s built over the next few decades.
Reminds me of what happened with Bitcoin mining ASICs. Everyone capable of making them realized they could make more money using them directly vs. selling them to others.
nVidia sells nearly 4M GPUs per year. Google claims like 100K TPUs. Scaling a production line by 10x is very difficult and Google has not shown aptitude in this area of expertise.
Even if Google wanted to scale 10x I'm not sure they could. nVidia is believed to be taking like half of TSMC's new capacity (existing capacity is not idle). I suppose technically that means the other half could be consumed by Google but it's likely TSMCs other customers wouldn't appreciate that.
Hence, buy $GOOG.