TPUs will thrive regardless of public adoption; Google's internal demand for TPU is such that they could buy every TPU ever produced.
One thing worth note here - TPUs are optimized for a fairly constrained set of operations. Google’s had good success with them, but, like many of the other Google architectural choices, this will constrain Google’s technical choice space in the future - if they’ve gone all in on TPUs, future Google machine learning projects will be using the sets of operations the TPUs excel at because that’s what Google has a lot of, not necessarily because that’s the optimal choice. This will have knock-on effects across the industry due to Google’s significant influence on industry practice and technical direction.
Every major Cloud vendor is trying to develop their custom AI ASIC. Putting Google aside, Amazon has trainium/inferentia, which Anthropic uses quite extensively. Microsoft is doing sth. similar, although they are quite behind. OpenAI is doing it. Meta is doing it. That's why the stock price of Broadcom/Marvell soared.
The opposite situation is with AMD which are avoiding the mistakes of Google.
My hope though is that AMD doesn’t start to compete with cloud service providers, e.g. by introducing their own cloud.