Piper Sandler has raised its forecasts for Alphabet (NASDAQ:GOOG), with analyst Thomas Champion estimating that Google’s external tensor processing unit hardware business could generate $104 billion in revenue by 2028.
The forecast follows Google’s disclosure of external TPU hardware sales for the first time in its second-quarter 2026 results. Piper Sandler said the disclosure prompted it to formalise its forecasts for the business using a model based on facilities and available power capacity.
Champion expects TPU hardware revenue of about $8 billion in 2026, based on approximately 240,000 chips. The estimate increases to $51 billion in 2027, representing around 2.4 million chips, before reaching $104 billion in 2028.
Under Piper Sandler’s framework, Google is assumed to reach a TPU run-rate capacity of 3 gigawatts by the end of 2027 and 6GW by the end of 2028. The firm estimates around $30 billion of compute capital expenditure for each gigawatt of TPU capacity, equivalent to approximately 1 million chips per GW.
The analyst also forecasts an operating margin of around 30% for TPU hardware sales.
Piper Sandler’s revised projections have increased its estimates for Google Cloud. The firm now forecasts 2027 Cloud revenue of $204 billion, representing a $92 billion year-over-year increase. That estimate comprises $153 billion from Core Cloud and approximately $51 billion from TPU hardware.
The firm’s updated 2027 and 2028 Cloud revenue forecasts are 15% and 17% above consensus estimates, respectively. Its Cloud EBIT projections for the two years are 18% to 19% above consensus, according to the research note.
Piper Sandler also raised its Alphabet price target to $400 from $395 and maintained its Overweight rating. The revised target is based on a discounted cash flow model incorporating a 2% increase in its 2027 revenue estimate and an 8% increase in its 2027 operating income forecast.
The firm compared its capacity assumptions with comments from Broadcom management regarding Anthropic-related demand. Piper Sandler said Broadcom management had discussed potential demand equivalent to 5GW in 2027 and 10GW in 2028. Champion estimated those capacity levels could correspond to $105 billion and $210 billion of revenue, respectively, if achieved.
Alphabet shares were down 0.7% in premarket trading at $341.60 at the time cited in the source, alongside broader declines in technology stocks.
Alphabet stock price
