Evercore Boosts Alphabet Revenue Estimates on Projected TPU AI Chip Sales
Evercore ISI maintained its Outperform rating and $450 price target on Alphabet Inc. (NASDAQ:GOOG), pointing to significant growth potential from external sales of its custom artificial intelligence hardware. Analyst Georgia Anderson forecasts that sales of Google's Tensor Processing Unit, or TPU, chips could generate $75 billion in revenue in 2027 and expand to $113 billion in 2028, with about $7.5 billion expected in the second half of 2026.
Following these projections, the brokerage raised its 2027 Google Cloud revenue estimate from $180 billion to $213 billion, while lifting its total 2027 revenue target for Alphabet to $651 billion from $618 billion. Industry checks suggest TPUs can deliver 20% to 40% cost savings for customers with experienced engineering teams. However, software constraints, talent shortages, and platform performance gaps present ongoing hurdles to faster market adoption.
Investors will be monitoring how quickly Alphabet recognizes revenue from current agreement pipelines, with the major portion expected to land in 2027. Key risks include regulatory pressure and rival AI infrastructure offerings from Meta Platforms Inc. (NASDAQ:META), Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). Alphabet shares fell over 2% to $337.30 in Friday trading alongside a general pull-back across major technology stocks.
Key points
- Analyst Georgia Anderson projects Alphabet TPU chip sales to produce $75 billion in 2027 revenue and $113 billion in 2028.
- Evercore raised Alphabet's 2027 Google Cloud revenue estimate to $213 billion and its total revenue forecast to $651 billion.
- Custom TPU hardware offers 20% to 40% lower costs for specialized clients, though software constraints and talent shortages remain barriers.
- Evercore reiterated an Outperform rating and $450 price target, representing approximately 30% potential upside from recent closing levels.
- Alphabet shares traded about 2.2% lower around $337.30 on Friday amidst broader tech market declines.
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How we writeDisclaimerQuestions and answers
How much revenue could Alphabet make from TPU AI chip sales?
Evercore ISI projects that external TPU sales could generate $7.5 billion in the second half of 2026, $75 billion in 2027, and $113 billion in 2028.
What is Evercore's price target for Alphabet stock?
Evercore maintained an Outperform rating and a $450 price target for Alphabet, which implies approximately 30% potential upside from its prior close.
What challenges could limit adoption of Google's TPU hardware?
Key adoption barriers include software limitations, a scarcity of specialized engineering talent, and platform performance gaps, alongside competition from Meta, Amazon, and Microsoft.