Alphabet has reportedly placed an order with Intel to manufacture over three million Tensor Processing Units slated for 2028, marking one of the largest disclosed AI chip foundry contracts for Intel Foundry Services. The deal is strategically significant for Intel, which has been aggressively courting hyperscaler customers to anchor its foundry business after years of manufacturing stumbles and a near-zero net margin in FY2025. Intel reported -$0.06 diluted EPS and essentially flat revenue of $52.9B in FY2025, making any major foundry win an outsized positive signal.

For Alphabet, the order suggests a deliberate effort to diversify TPU manufacturing away from TSMC reliance, reducing geopolitical concentration risk while potentially locking in capacity ahead of 2028 AI compute demand. The key watch items: Intel's ability to deliver on its 18A process node timeline, whether this is a pilot order or the beginning of a broader GOOGL-INTC foundry relationship, and how the market reprices INTC's foundry narrative against its still-thin margins and execution history.