TLDR
- Piper Sandler projects Alphabet’s external TPU chip sales could reach $104 billion by 2028.
- The firm raised its price target on GOOGL to $400 from $395 and kept an Overweight rating.
- GOOGL was down roughly 1% premarket, trading near $341.60.
- Piper Sandler’s 2027 Cloud revenue estimate now sits 15-17% above Wall Street consensus.
- Alphabet’s Q2 2026 earnings beat estimates, with EPS of $9.11 versus a $2.87 forecast.
Alphabet shares slipped about 1% in premarket trading Monday, changing hands near $341.60, as broader tech stocks came under pressure. The move came despite a bullish new note from Piper Sandler analyst Thomas Champion raised his price target on GOOGL to $400 from $395. He kept his Overweight rating on the stock.
The new target implies meaningful upside from current levels. It’s built on a fresh model tracking Alphabet’s chip business.
Champion’s thesis centers on Google’s Tensor Processing Units, or TPUs. He believes the external hardware business could generate $104 billion in revenue by 2028.
That estimate comes from Google’s decision to disclose external TPU sales for the first time. The company revealed the figures in its second-quarter 2026 earnings report.
Champion built his projections around a facilities and power-capacity framework. He now expects TPU sales of about $8 billion in 2026, climbing to $51 billion in 2027.
The Capacity Buildout
The model assumes 3 gigawatts of run-rate TPU capacity by the end of 2027. That figure doubles to 6 gigawatts by the end of 2028.
Piper Sandler estimates $30 billion in compute capital spending per gigawatt of capacity. That works out to roughly 1 million chips per gigawatt.
Champion also forecasts a hardware operating margin near 30% on TPU sales. That would put the segment in line with Alphabet’s existing profit margins.
The firm’s 2027 Cloud revenue estimate now stands at $204 billion. That figure is up $92 billion from the prior year, split between $153 billion in core cloud and $51 billion from TPU sales.
Piper Sandler’s 2027 and 2028 Cloud EBIT estimates now sit 18-19% above Wall Street consensus. Champion called his own numbers “eye-popping” but said they may still be conservative.
He pointed to comments from Broadcom management about Anthropic’s chip demand. Broadcom has discussed 5 gigawatts of Anthropic-related capacity for 2027 and 10 gigawatts for 2028.
Wall Street Reaction
Other analysts have also weighed in on Alphabet recently. Goldman Sachs cut its target to $435 from $440 while keeping a buy rating.
China Renaissance lowered its target to $445 from $485. UBS trimmed its target to $379 from $400 while maintaining a neutral stance.
Morgan Stanley cut its price objective to $400 from $415. Seven analysts rate the stock Strong Buy, 34 rate it Buy, and four rate it Hold, according to MarketBeat data.
The average price target across Wall Street sits at $419.93. That’s above Piper Sandler’s own $400 figure.
Alphabet’s last earnings report showed strength across the board. The company posted $9.11 in earnings per share against a $2.87 estimate.
Revenue came in at $119.80 billion, up 24.2% year over year. That topped the consensus estimate of $116.53 billion.
Insiders sold 441,428 shares worth about $8.7 million over the past 90 days. Institutional investors and hedge funds currently own 27.26% of the company.
