Piper Sandler sees Google TPU sales hitting $104BN by 2028

Investing.com -- Piper Sandler analyst Thomas Champion is projecting Google’s newly disclosed external chip business will generate $104 billion in TPU hardware revenue by 2028, a forecast that the firm says the broader Street has yet to price in. Despite the bullish outlook, shares of Alphabet (NASDAQ: GOOGL) were down 0.7% premarket at $341.60 amid broader weakness in tech.

Alphabet is the direct equity expression of this thesis, with Piper Sandler’s revised model now placing its 2027 Cloud revenue estimate 15-17% above consensus — a gap the firm attributes almost entirely to the market’s underappreciation of the TPU hardware ramp. Investors looking for a single instrument to track this theme would find GOOGL the most direct, given that TPU revenue flows into the Google Cloud segment.

Champion published the note after Google disclosed external hardware sales for the first time in its second-quarter 2026 earnings report — a milestone that triggered a formal reassessment of the revenue opportunity. "In 2Q26, GOOGL reported external hardware (TPU) sales for the first time," Champion wrote. "We incorporated hardware directionally in our model, but this note formalizes our forecasts based on a facilities and power-capacity framework. We see TPU sales above $100BN by 2028 and raise ’27/’28E Cloud revenues to 15%/17% above consensus. Reiterate OW, PT to $400."

The price target moves to $400 from $395, derived from a DCF model that incorporates a 2% lift in 2027 revenue estimates and an 8% increase in 2027 operating income estimates, according to Piper Sandler. The firm reiterates its Overweight rating on the stock.

The TPU revenue trajectory in Piper Sandler’s model is steep. Champion estimates sales of approximately $8 billion in 2026 (roughly 240,000 chips), climbing to $51 billion in 2027 (approximately 2.4 million chips), and reaching $104 billion in 2028. The framework is anchored to a facilities and power-capacity build-out, with base-case assumptions calling for 3 gigawatts of run-rate capacity by the end of 2027 and 6GW by the end of 2028. Piper Sandler estimates $30 billion in compute capital expenditure per gigawatt of TPU capacity, corresponding to roughly 1 million chips per GW.

On profitability, Champion forecasts a roughly 30% hardware operating margin on TPU sales, broadly in line with Google’s existing business margins, per Piper Sandler’s estimate.

The resulting 2027 Cloud revenue picture is striking. Piper Sandler now models total 2027 Cloud revenue of $204 billion, up $92 billion year over year, comprising $153 billion in Core Cloud and approximately $51 billion from the TPU ramp. The firm’s 2027 and 2028 Cloud EBIT estimates now sit 18-19% above consensus, per the note.

Piper Sandler is careful to flag that even its "eye-popping" estimates may be conservative relative to demand signals emerging from partners. Champion wrote: "While our estimates are eye-popping in revenue scale, we have tried to be measured. Our TPU estimates call for $51BN in sales in ’27 and $104BN in ’28 (ramping to 3GW/6GW run-rate by end of ’27/’28). However, Broadcom mgmt recently spoke to 5GW’s of Anthropic demand in ’27 and 10GW’s for ’28, which we estimate as $105BN/$210BN in revenue if the capacity is achieved."

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