Catenaa, Thursday, December 04, 2025- Alphabet investors are growing increasingly confident that the company’s chips could represent a significant driver of future revenue for Google’s parent.
The success of Alphabet’s tensor processing unit, or TPU, chips is a primary reason for the stock’s 31% fourth-quarter rally, which is the tenth-best performance in the S&P 500 Index.
The TPUs were always seen as a major strength internally, accelerating growth for the company’s cloud-computing business. But there’s rising optimism that Alphabet could start selling the chips to third parties, creating a new revenue stream that could ultimately be worth almost a trillion dollars.
Should Alphabet get serious about selling its TPUs, Luria estimates they could capture 20% of the artificial intelligence market over a few years, which would make it a roughly $900 billion business.
In late October, Alphabet announced that it would supply tens of billions of dollars of chips to Anthropic PBC, which sent the stock on a two-day rally of more than 6%.
Then, a month later, the Information reported that Meta Platforms is in talks to spend billions for access to TPUs, sparking another leap.
The value of Alphabet’s TPUs was corroborated by the launch of the company’s latest Gemini AI model, which received glowing reviews and is optimized to run on the chips.
Every 500,000 TPU chips sold to a third-party data center could add about $13 billion to Alphabet’s 2027 revenue, and 40 cents to its earnings per share, according to Morgan Stanley’s estimates.
Alphabet is expected to post roughly $447 billion in revenue in 2027, based on analyst projections, so adding $13 billion would boost sales by almost 3%.
Consensus estimates for the company’s 2027 revenue have risen by more than 6% over the past three months, according to data compiled by Bloomberg.
