Alphabet (GOOGL) shares slipped about 1% in premarket trading Monday, changing hands near $341.60, as broader technology stocks came under pressure. The dip came despite a bullish research note from Piper Sandler, where analyst Thomas Champion raised his price target on GOOGL to $400 from $395 and kept an Overweight rating on the stock. Champion's projections point to Alphabet's external TPU chip sales reaching $104 billion by 2028.

The new target implies meaningful upside from current levels. It is built on a fresh model that tracks Alphabet's chip business and forms the basis of his long-term revenue projections.

The TPU Thesis

At the center of the call are Google's Tensor Processing Units, or TPUs — custom chips Google developed to power AI workloads, part of a broader shift among major cloud providers toward designing their own AI silicon. Champion believes the external hardware business — TPU sales to customers outside Google — could generate $104 billion in revenue by 2028. The estimate follows Google's decision to disclose external TPU sales for the first time, with the company revealing the figures in its second-quarter 2026 earnings report. For outside observers, the new line item offers a direct read on demand for Google's chips beyond Alphabet's own operations.

Champion constructed his projections around a facilities and power-capacity framework. He now expects TPU sales of roughly $8 billion in 2026, climbing to $51 billion in 2027.

The Capacity Buildout

The model assumes 3 gigawatts of run-rate TPU capacity by the end of 2027, a figure that doubles to 6 gigawatts by the end of 2028. Piper Sandler estimates $30 billion compute capital spending per gigawatt of capacity, which works out to roughly 1 million chips per gigawatt.

Champion also forecasts a hardware operating margin near 30% on TPU sales, a level that would put the segment in line with Alphabet's existing profit margins.

The firm's 2027 Cloud revenue estimate now stands at $204 billion, an increase of $92 billion from the prior year. That total is split between $153 billion in core cloud revenue and $51 billion from TPU sales. Piper Sandler's 2027 Cloud revenue estimate sits 15-17% above Wall Street consensus, while its 2027 and 2028 Cloud EBIT estimates are 18-19% above consensus.

Champion described his own numbers as "eye-popping" but suggested they may still be conservative. He pointed to comments from custom-chip designer Broadcom about Anthropic's chip demand, noting that Broadcom has discussed 5 gigawatts of Anthropic-related capacity for 2027 and 10 gigawatts for 2028.

Wall Street Reaction

Other analysts have also weighed in on Alphabet recently. Goldman Sachs cut its price target to $435 from $440 while keeping a buy rating. China Renaissance lowered its target to $445 from $485. UBS trimmed its target to $379 from $400 while maintaining a neutral stance, and Morgan Stanley cut its price objective to $400 from $415.

According to MarketBeat data, seven analysts rate the stock Strong Buy, 34 rate it Buy, and four rate it Hold. The average price target across Wall Street stands at $419.93, above Piper Sandler's own $400 figure.

Recent Earnings Strength

Alphabet's last earnings report showed strength across the board. The company posted earnings per share of $9.11, well ahead of the $2.87 estimate. Revenue came in at $119.80 billion, up 24.2% year over year, topping the consensus estimate of $116.53 billion.

Separately, insiders sold 441,428 shares worth approximately $8.7 million over the past 90 days. Institutional investors and hedge funds currently own 27.26% of the company.

This article originally appeared on CoinCentral.