Key Takeaways
- Alphabet’s external TPU chip revenue is forecasted to surge to $104 billion by 2028, according to Piper Sandler projections.
- Piper Sandler upgraded GOOGL price target from $395 to $400 while maintaining an Overweight rating on the stock.
- Shares of GOOGL declined approximately 1% in premarket hours, hovering around $341.60.
- The firm’s Cloud revenue projection for 2027 exceeds Street consensus by 15-17%.
- Google’s most recent quarterly report showed earnings per share of $9.11, crushing the $2.87 analyst forecast.
Shares of Alphabet experienced a modest decline of roughly 1% during Monday’s premarket session, with the stock trading near $341.60 amid weakness across the technology sector. The dip occurred even as Piper Sandler analyst Thomas Champion delivered an optimistic assessment, elevating his price objective on GOOGL from $395 to $400. Champion maintained his Overweight recommendation on the tech giant.
The revised target suggests substantial appreciation potential from present trading levels. Champion’s updated outlook is grounded in a comprehensive analysis of Alphabet’s semiconductor operations.
The core of Champion’s investment case revolves around Google’s proprietary Tensor Processing Units, commonly known as TPUs. His analysis suggests the external chip business could deliver $104 billion in annual revenue by 2028.
This forecast emerged following Google’s unprecedented disclosure of external TPU sales data. The tech behemoth shared these metrics during its second-quarter 2026 financial results announcement.
Champion constructed his revenue projections using a framework based on infrastructure facilities and power capacity constraints. His model anticipates approximately $8 billion in TPU sales for 2026, escalating dramatically to $51 billion in 2027.
Infrastructure Expansion Plans
The analytical framework anticipates 3 gigawatts of operational TPU capacity reaching completion by year-end 2027. This infrastructure footprint is projected to expand to 6 gigawatts by the conclusion of 2028.
Piper Sandler calculates compute capital expenditure requirements at $30 billion per gigawatt of installed capacity. This translates to approximately one million chips deployed per gigawatt.
Champion also projects hardware operating margins approaching 30% for the TPU business unit. This profitability level would align with Alphabet’s current margin profile across other divisions.
The investment firm’s Cloud revenue forecast for 2027 now reaches $204 billion. This represents a $92 billion year-over-year increase, comprising $153 billion from traditional cloud services and $51 billion attributed to TPU hardware sales.
Piper Sandler’s earnings before interest and taxes estimates for 2027 and 2028 Cloud operations exceed consensus projections by 18-19%. Champion characterized his projections as “eye-popping” while noting they might actually underestimate actual performance.
He referenced statements from Broadcom executives regarding Anthropic’s semiconductor requirements. Broadcom has outlined plans for 5 gigawatts of Anthropic-specific capacity in 2027, expanding to 10 gigawatts in 2028.
Analyst Sentiment Overview
Multiple Wall Street firms have recently updated their perspectives on Alphabet. Goldman Sachs adjusted its price objective downward to $435 from $440 while preserving a buy recommendation.
China Renaissance reduced its target to $445 from a previous $485. UBS decreased its forecast to $379 from $400 while continuing with a neutral rating.
Morgan Stanley lowered its price target to $400 from $415. MarketBeat data shows seven analysts assigning Strong Buy ratings, 34 maintaining Buy ratings, and four recommending Hold positions.
The consensus price target among Wall Street analysts stands at $419.93. This figure surpasses Piper Sandler’s recently updated $400 projection.
Alphabet’s most recent quarterly performance demonstrated robust execution across business segments. The company delivered earnings per share of $9.11, significantly exceeding the $2.87 analyst consensus.
Total revenue reached $119.80 billion, representing 24.2% year-over-year growth. This performance beat the Street’s expectation of $116.53 billion.
Company insiders divested 441,428 shares valued at approximately $8.7 million during the previous 90-day period. Institutional investors and hedge funds collectively control 27.26% of outstanding shares.
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