TPU-As-A-Service could boost Google’s 2028 profit by over 15%: Barclays

Investing.com -- Barclays said Alphabet is poised to launch one of its most significant new AI infrastructure initiatives through a "TPU-as-a-service" (TPU-aaS) model, arguing the market is underestimating its long-term earnings potential. The brokerage believes the initiative could lift Alphabet's 2028 gross profit by about 15% while significantly expanding operating income.

The brokerage said the new model will initially support Anthropic and could later expand to other AI developers, allowing Google to sell its Tensor Processing Units (TPUs) directly rather than only through Google Cloud. Barclays expects the strategy to broaden AI compute capacity across the industry while improving Alphabet's capital efficiency by shifting toward a more asset-light infrastructure model.

Barclays maintained its Overweight rating and $425 price target on Alphabet, saying the TPU-aaS opportunity is not fully reflected in investor expectations. The firm significantly raised its Google Cloud revenue and operating income forecasts after incorporating the new business model into its financial estimates.

According to Barclays, the model offers advantages across the AI ecosystem. AI labs such as Anthropic would gain greater control over their computing infrastructure and reduce dependence on hyperscaler cloud agreements, while partners including Broadcom, Blackstone and infrastructure provider Fluidstack stand to benefit from expanded demand for AI hardware, financing and data center management.

Barclays estimates Google could generate roughly $250 billion in TPU-aaS revenue by 2028 if deployments scale as expected, with external TPU sales reaching more than 11 gigawatts of capacity. The firm said the initiative could represent more than one-third upside to current 2028 revenue consensus and materially boost Google Cloud's long-term growth profile.

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