Alphabet TPU Chip Sales May Reach $104B by 2028

The big reason investors should care is margin mix. Alphabet is no longer just selling cloud services and ads; it is beginning to sell the hardware layer underneath AI workloads as well. Piper Sandler now assumes TPU revenue rises from roughly $8 billion this year to $51 billion next year, with capacity climbing to 3 gigawatts by the end of 2027 and 6 gigawatts by the end of 2028. If even a portion of that buildout lands, it would deepen Alphabet’s moat with cloud customers and give the company more control over the economics of AI infrastructure.

There is already evidence this is becoming more than a theoretical model. Alphabet disclosed in its second quarter that it had started booking revenue from TPU system sales shipped to customer data centers. Google Cloud revenue jumped 82% to $24.8 billion in the quarter, showing that the broader cloud franchise is already scaling fast enough to absorb and support more hardware ambition. Finance chief Anat Ashkenazi also said much of the revenue from existing TPU agreements will not be realized until 2027, which suggests the commercial ramp is still early.

That timing matters for investors because it means the market may still be valuing Alphabet mostly as an advertising and cloud company, not as a chip platform company. Piper Sandler’s new target implies about 17% upside from the stock’s recent close near $340, and it is not alone. TipRanks data show 11 of 12 analysts rate the shares a buy or better, with a consensus target above $430. The stock may wobble in the near term, but the long-term setup looks more interesting: Alphabet is using AI to strengthen search, cloud and custom silicon at the same time.

NVIDIA investors should not dismiss the threat, even if the company still dominates the AI chip market by a wide margin. Broadcom has already talked about outsized TPU-related demand from Anthropic, and Champion suggested his estimates may even be conservative if those capacity plans hold. In other words, Alphabet does not need to beat NVIDIA outright to matter. It only needs to carve out a profitable share of one of the fastest-growing markets in tech.

For long-term investors, the takeaway is simple: Alphabet is building a second act inside AI, and TPU may prove to be one of the most valuable pieces of that story. The next quarterly report should give investors a better read on how fast the chip business is scaling, but the bigger message is already clear — Alphabet looks like a company that could compound for years if its silicon strategy keeps gaining traction. Worth watching closely, and worth keeping on the buy list.