Alphabet Cloud Forecast Raised as Piper Sandler Models $104 Billion in 2028 TPU Sales

Piper Sandler has increased its revenue estimates for Alphabet (NASDAQ:GOOG) after incorporating projected external sales of Google’s tensor processing unit hardware into its forecasts.

Analyst Thomas Champion estimates TPU hardware sales could reach approximately $8 billion in 2026, $51 billion in 2027 and $104 billion in 2028. The projections follow Google’s first disclosure of external TPU hardware sales in its second-quarter 2026 earnings report.

Piper Sandler based its forecasts on expected facilities development and power capacity. Its model assumes Google reaches 3 gigawatts of TPU run-rate capacity by the end of 2027, increasing to 6GW by the end of 2028.

The firm estimates that each gigawatt of capacity represents approximately $30 billion of compute capital expenditure and around 1 million TPU chips. Its 2026 revenue estimate corresponds to roughly 240,000 chips, while the 2027 forecast assumes approximately 2.4 million chips.

Piper Sandler estimates that TPU hardware could generate an operating margin of around 30%.

The inclusion of the projected hardware sales has also resulted in higher forecasts for Google Cloud. Piper Sandler now expects the segment to generate $204 billion of revenue in 2027, an increase of $92 billion from the prior year. The forecast consists of $153 billion in Core Cloud revenue and approximately $51 billion from TPU hardware.

Its revised Cloud revenue forecasts for 2027 and 2028 are 15% and 17% above consensus estimates, respectively, while its Cloud EBIT estimates are 18% to 19% above consensus.

Piper Sandler raised its Alphabet price target to $400 from $395 while maintaining an Overweight rating. According to the firm, its discounted cash flow valuation reflects a 2% increase in estimated 2027 revenue and an 8% increase in projected 2027 operating income.

The analyst also referenced Broadcom management’s comments regarding potential Anthropic demand of 5GW in 2027 and 10GW in 2028. Piper Sandler estimates those capacity levels would correspond to approximately $105 billion and $210 billion of revenue, respectively, if achieved.

Alphabet shares were trading 0.7% lower at $341.60 in premarket trading at the time referenced in the source, amid broader weakness in technology stocks.