Google TPU Chip Boom Could Unleash $200 Billion in Revenue

Morgan Stanley's analyst Brian Nowak has revised his estimates for Alphabet's (GOOGL) revenue from its in-house tensor processing unit (TPU) chips. He predicts that Alphabet could generate up to $200 billion in revenue over the next several years.

This forecast comes after reports indicated that Alphabet may supply about one million TPUs, representing roughly 1.3 gigawatts of capacity, for approximately $35 billion. This implies pricing of about $27 billion per gigawatt.

Morgan Stanley now expects Google to sell about 0.3 gigawatts of TPU systems in the second half of 2026, followed by 3.2 gigawatts in 2027 and 4.2 gigawatts in 2028. The firm estimates this could produce $84 billion and $108 billion in related Google Cloud revenue in 2027 and 2028, respectively.

The analyst also pointed to Alphabet's expanded custom-chip work with Marvell (MRVL), which may support higher TPU pricing and margins. Morgan Stanley now assumes a 30% gross margin on TPU system sales, compared with its previous 20% estimate.