Alphabet (GOOGL 0.50%) (GOOG 0.34%) has been developing its own Tensor Processing Units (TPUs) for years. But it wasn’t until recently that the company started to see these processors not just as a side project but as a real alternative to Nvidia‘s (NVDA +3.90%) graphics processors.

The shift could be consequential for Nvidia, as Google focuses more on using its own processors and renting them to other AI companies.

Here’s why Google’s TPUs could be a bigger threat to Nvidia than investors might think.

Image source: Getty Images.

Custom processors are really good at AI compute

It used to be that graphics processors were the hands-down winners for all things artificial intelligence.

But what AI companies have found recently is that…