Quick Summary
- Analyst forecasts suggest Alphabet’s TPU chip sales to external customers may surge to $104 billion by 2028.
- Piper Sandler upgraded its GOOGL price objective from $395 to $400, maintaining an Overweight stance.
- Shares declined approximately 1% in early trading, hovering around $341.60.
- The investment firm’s Cloud revenue projection for 2027 exceeds Street estimates by 15-17%.
- Latest quarterly results showed Alphabet delivering $9.11 EPS, significantly above the $2.87 consensus.
Shares of Alphabet experienced a modest 1% decline during Monday’s premarket session, trading around $341.60, as technology stocks faced broader selling pressure. The pullback occurred even as Piper Sandler delivered an optimistic assessment. Analyst Thomas Champion increased his price objective on GOOGL from $395 to $400 while reaffirming his Overweight recommendation.
The updated target suggests substantial appreciation potential from present trading levels. Champion’s analysis rests on an updated framework evaluating Alphabet’s semiconductor operations.
The investment thesis revolves around Google’s proprietary Tensor Processing Units. Champion anticipates the external chip business could deliver $104 billion in total revenue by 2028.
This projection follows Google’s inaugural disclosure of external TPU sales data. The tech giant shared these metrics during its Q2 2026 financial results presentation.
Champion constructed his revenue forecast using a facilities and power-infrastructure methodology. His model anticipates approximately $8 billion in TPU revenue for 2026, escalating to $51 billion throughout 2027.
Infrastructure Expansion Plans
The forecast assumes a run-rate TPU infrastructure capacity reaching 3 gigawatts by late 2027. This capacity is projected to expand to 6 gigawatts by the conclusion of 2028.
Piper Sandler’s calculations incorporate $30 billion in computing infrastructure investment per gigawatt of operational capacity. This translates to approximately 1 million processors per gigawatt deployed.
Champion’s model also anticipates operating margins approaching 30% on TPU hardware revenue. Such profitability would align with Alphabet’s current margin profile across other business units.
The investment bank’s Cloud revenue projection for 2027 totals $204 billion. This represents a $92 billion year-over-year increase, comprising $153 billion from traditional cloud services and $51 billion attributed to TPU chip sales.
Piper Sandler’s EBIT forecasts for 2027 and 2028 Cloud operations exceed consensus Wall Street estimates by 18-19%. Champion acknowledged his projections appear “eye-popping” yet suggested they might prove understated.
He referenced statements from Broadcom executives regarding Anthropic’s processor requirements. Broadcom has outlined plans for 5 gigawatts of Anthropic-focused capacity in 2027, expanding to 10 gigawatts in 2028.
Broader Analyst Sentiment
Additional Wall Street analysts have recently updated their perspectives on Alphabet. Goldman Sachs reduced its price target from $440 to $435 while preserving a buy recommendation.
China Renaissance adjusted its objective downward from $485 to $445. UBS decreased its target from $400 to $379 while retaining a neutral rating.
Morgan Stanley lowered its price projection from $415 to $400. According to MarketBeat tracking, seven analysts assign Strong Buy ratings, 34 recommend Buy, and four maintain Hold positions.
The consensus Wall Street price target stands at $419.93. This figure exceeds Piper Sandler’s $400 objective.
Alphabet’s most recent quarterly performance demonstrated broad-based momentum. The company delivered $9.11 per share in earnings, crushing the $2.87 consensus forecast.
Total revenue reached $119.80 billion, representing 24.2% year-over-year growth. This performance surpassed analyst expectations of $116.53 billion.
Company insiders divested 441,428 shares valued at approximately $8.7 million during the past quarter. Institutional investors and fund managers collectively control 27.26% of outstanding shares.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
