Piper Sandler projects Google's TPU revenue could reach $104 billion by 2028, raising Alphabet's price target to $400.
Google could be sitting on an AI chip business worth more than $100 billion in annual revenue within just two years. Piper Sandler analyst Thomas Champion expects Google's external Tensor Processing Unit business to generate about $104 billion in hardware revenue by 2028, with the analyst believing Wall Street is still underestimating the scale of the opportunity. The forecast follows Google's first disclosure of external TPU hardware sales with its second-quarter 2026 results. Piper Sandler has now built those sales directly into its forecasts, raising its Alphabet price target to $400 from $395 while maintaining its Overweight rating.
Champion estimates TPU hardware revenue of around $8 billion in 2026, which would represent roughly 240,000 chips. The forecast then accelerates dramatically: TPU sales are projected to reach around $51 billion in 2027 with approximately 2.4 million chips sold, then more than double again to $104 billion in 2028.
TPUs are chips developed by Google specifically for artificial intelligence workloads, used both to train large AI models and to run those models once deployed. This positions Google directly in a market where demand for AI computing power has exploded. Piper Sandler based its forecast partly on the data centre capacity it believes Google can build for external TPU customers, assuming around 3 gigawatts of run-rate TPU capacity by the end of 2027, potentially doubling to 6 gigawatts by the end of 2028. The firm estimates that each gigawatt of TPU capacity represents roughly $30 billion in computing capital expenditure and around 1 million chips.
The TPU forecast has reshaped Piper Sandler's expectations for Google Cloud. The firm now projects total Google Cloud revenue of approximately $204 billion in 2027, an increase of about $92 billion from the previous year, with roughly $153 billion from Google's core cloud business and another $51 billion from the TPU hardware ramp. This puts the firm's 2027 Google Cloud revenue estimate around 15% above current consensus expectations, with its 2028 estimate about 17% higher than consensus.
Champion estimates TPU hardware could generate an operating margin of around 30%, broadly consistent with margins across Google's existing operations. Piper Sandler's Google Cloud operating profit estimates for 2027 and 2028 are now around 18% to 19% above consensus. These revisions lifted Piper Sandler's broader Alphabet forecasts, with its 2027 revenue estimate increasing by around 2% and its operating income forecast rising about 8%, helping push the Alphabet price target from $395 to $400.
Piper Sandler says even its $104 billion TPU forecast may prove conservative if current demand signals translate into actual deployments. Broadcom management recently discussed demand from Anthropic that could reach around 5 gigawatts in 2027 and 10 gigawatts in 2028. Using Piper Sandler's framework, Champion estimates that level of capacity could represent roughly $105 billion in revenue in 2027 and $210 billion in 2028 if fully achieved—numbers much larger than the analyst's base case for Google's TPU sales.
Major uncertainties remain. Building several gigawatts of AI computing infrastructure requires enormous amounts of capital, electricity and data centre capacity, while actual chip shipments will depend on customer demand and how quickly facilities can be completed. Competition remains intense as well, with Nvidia continuing to dominate the AI accelerator market and other technology companies developing their own custom chips.
Yet Google now has something it did not previously offer investors in the same way: its custom AI chips are becoming an external revenue business rather than simply infrastructure used internally. If TPU revenue really climbs from about $8 billion in 2026 to $104 billion in 2028, Google will have built a massive new business in roughly the time it takes Wall Street to complete two annual forecast cycles.