Piper Sandler Sees Google's External Chip Business Soaring to $104 Billion by 2028

Piper Sandler has revised its estimates for Google's (Alphabet) external chip business, forecasting that it will generate $104 billion in TPU hardware revenue by 2028. The firm's analyst, Thomas Champion, attributes this growth to the market underappreciating the ramp-up of TPU hardware sales.

Piper Sandler's revised model estimates that Alphabet's Cloud revenue for 2027 will be between 15-17% above consensus, driven largely by the increasing demand for TPUs. The firm sees TPU sales reaching $8 billion in 2026, climbing to $51 billion in 2027, and peaking at $104 billion in 2028.

The framework behind Piper Sandler's estimates is based on 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. The firm estimates that $30 billion in compute capital expenditure per gigawatt of TPU capacity will be required, corresponding to roughly 1 million chips per GW.