By Jules Rimmer
Alphabet could be selling 1 million AI chips by 2027, analysts say
Alphabet’s AI efforts – from Gemini 3 to custom-built tensor processing units – have been winning praise.
A report that Meta is in discussions to buy billions of dollars’ worth of Alphabet’s highly specialized AI microchips has led to speculation that the Google parent could encroach on Nvidia’s dominant market share.
Morgan Stanley on Wednesday became the latest to weigh in on what has become the hottest topic on Wall Street. It’s “not unreasonable” to suggest that by 2027, Alphabet (GOOG) (GOOGL) could be shipping 500,000 to 1,000,000 of its TPUs, or custom chips known as tensor-processing units, analysts led by Brian Nowak said in a note to clients.
The number is notable because Alphabet designed the chips for internal use, but its success with them – plus the global crunch for more computing power – has sparked external interest.
In the market for artificial-intelligence chips, Nvidia (NVDA) has a roughly 90% share, according to third-party industry data. The company’s dominance helped it achieve a market capitalization of $5 trillion less than a month ago, though the stock’s recent pullback has brought Nvidia’s market value down to $4.3 trillion.
A recent report from the Information said that Meta (META) could start using Alphabet’s highly specialized chips, cutting Nvidia’s market share. That could spark boosts to Alphabet earnings forecasts, which have driven Alphabet’s stock price up in anticipation and lifted its market capitalization to the brink of $4 trillion.
Shares of Alphabet slipped 1% on Wednesday.
Morgan Stanley’s calculations showed an 11% uplift to Alphabet’s cloud revenues and a 3% uplift to earnings per share for every 500,000 TPUs that the company sells externally. Moreover, faster cloud growth and expansion into this market could allow Alphabet shares to command a higher price-earnings (P/E) multiple.
In a Tuesday post on X from Nvidia, the company’s newsroom wrote: “We are delighted by Google’s success,” while pointing out Nvidia is “a generation ahead of the industry – it’s the only platform that runs every AI model and does it everywhere computing is done.”
Nvidia recently commanded the overwhelming majority of the market for graphics processing units.
Nowak said that Alphabet has invested many resources into developing its TPUs to make them compatible with more systems, including through software enhancements.
These latest developments could help Alphabet’s stock sustain its recent AI-fueled momentum that extends beyond chip excitement. The company’s Gemini 3 launch earlier this month was generally regarded as hugely successful, positioning Alphabet’s large-language model as a serious competitive threat to OpenAI’s ChatGPT.
Alphabet’s stock has risen 56% over the past three months, bringing its year-to-date gains to 71%. Nvidia’s stock is off 2% over a three-month span but ahead 32% in 2025.
-Jules Rimmer
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11-26-25 1758ET
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