Piper Sandler projects Google's in-house TPU chip revenue reaching $104 billion by 2028.
Alphabet stock experienced a modest 1% decline in Monday's premarket session, hovering near $341.60, as technology equities faced broad selling pressure. This downturn occurred even as Piper Sandler delivered an optimistic update, with analyst Thomas Champion increasing his GOOGL price target to $400 from the previous $395 level, while maintaining an Overweight recommendation.
Champion's revised target suggests substantial appreciation potential from present valuation levels. The upgrade stems from an updated financial model focused on Alphabet's semiconductor operations, specifically its Tensor Processing Unit (TPU) technology. His analysis indicates the external chip hardware business may deliver $104 billion in annual revenue by 2028. This projection emerged after Google made its first-ever public disclosure of external TPU sales figures during its second-quarter 2026 financial results announcement.
Champion constructed his revenue forecasts using a framework based on facility infrastructure and power capacity constraints. His model anticipates approximately $8 billion in TPU sales for 2026, accelerating sharply to $51 billion throughout 2027. The analyst's financial model incorporates 3 gigawatts of operational TPU capacity reaching completion by late 2027, with the capacity footprint expected to expand further, hitting 6 gigawatts by December 2028. Piper Sandler's analysis applies a $30 billion compute infrastructure capital expenditure estimate per gigawatt of installed capacity, which translates to approximately 1 million semiconductor chips deployed per gigawatt.
Champion's projections incorporate a 30% operating margin assumption for TPU hardware sales, a profitability level that would align with Alphabet's current margin structure across other business segments. The investment firm's 2027 Cloud division revenue forecast now stands at $204 billion, representing a $92 billion year-over-year increase comprised of $153 billion from traditional cloud services plus $51 billion attributed to TPU chip sales. This projection exceeds Wall Street consensus by 15–17%. Piper Sandler's Cloud EBIT projections for both 2027 and 2028 exceed consensus estimates by 18–19%. Champion characterized his own forecasts as "eye-popping" while suggesting they might actually understate potential performance. He referenced recent statements from Broadcom executives regarding Anthropic's semiconductor requirements, noting that Broadcom has publicly discussed 5 gigawatts of Anthropic-specific infrastructure capacity scheduled for 2027, expanding to 10 gigawatts throughout 2028.
Alphabet's most recent quarterly earnings report demonstrated robust performance metrics. The company delivered $9.11 in per-share earnings, substantially exceeding the $2.87 analyst consensus. Total revenue reached $119.80 billion, marking a 24.2% year-over-year expansion, surpassing the Street's $116.53 billion expectation.
Several additional Wall Street firms have recently updated their Alphabet coverage. Goldman Sachs adjusted its price objective downward to $435 from $440 while preserving its buy recommendation. China Renaissance reduced its target price to $445 from a previous $485 level. UBS made a slight trim to $379 from $400 while sustaining a neutral outlook. Morgan Stanley implemented a price target reduction to $400 from $415. MarketBeat data shows seven analysts assign Strong Buy ratings, 34 maintain Buy ratings, and four hold neutral positions on the stock. The consensus Wall Street price target currently registers at $419.93, which exceeds Piper Sandler's newly established $400 target.
Company insiders divested 441,428 shares valued at approximately $8.7 million during the trailing 90-day period. Institutional investors and hedge funds collectively control 27.26% of outstanding shares.