Alphabet starts selling AI chips and revenue already totals billions, but stock squeezes cash

Alphabet, Google's parent company, started selling artificial intelligence chips developed internally, a line that was previously reserved for the company's own use. According to InfoMoney, based on information from Reuters, the revenue from this new front is already measured in billions of dollars. The change puts the company's chips in competition with those from Nvidia.

The account, however, has another side. According to the report, building inventory to meet growing demand is putting pressure on the company's cash flow. Selling chips requires investing in hardware before customers pay, which creates a mismatch between the money out and the money in.

For comparison, the text mentions the company's traditional businesses, search and the cloud. These are consolidated operations, which serve as a reference to measure the weight of the investment in own hardware.

In addition to stock, Alphabet continues to invest heavily in data centers, another front that consumes capital. The picture described by the report is that of revenue that grows at the same time that the company uses cash intensively.

What changes for the investor

For those who follow the Nasdaq, the central point is reading cash, not just revenue. A chip business that already makes billions attracts attention, but investors will need to watch how much capital is tied up in inventory and data centers until customers pay. It is also worth monitoring the extent to which Alphabet's own offering competes for space with Nvidia's chips, which could affect prices and margins in this market. The facts gathered do not allow us to predict the performance of the shares, and this article does not indicate the purchase or sale of any paper.

Automatically translated from Portuguese.