Key TakeawaysMorgan Stanley forecasts Google’s custom TPU chip business could deliver $200B in revenue within the next several yearsBrian Nowak, Morgan Stanley analyst, increased TPU pricing projections to $27bn/GW with gross margins of 30%, versus prior estimates of $20bn/GW at 20% marginsThe firm anticipates Google Cloud will generate $84bn and $108bn from TPU-related sales in 2027 and 2028 respectivelyGOOGL maintains a “Buy” consensus rating among Wall Street analysts with a $420.19 average price targetMajor institutional shareholders like Vanguard and Norges Bank have expanded their GOOGL holdingsShares of Alphabet (GOOGL) began Tuesday’s session at $348.06 and climbed approximately 0.9% during early market hours following Morgan Stanley’s enhanced forecast for the tech giant’s proprietary chip division.Alphabet Inc., GOOGLBrian Nowak, an analyst at Morgan Stanley, projected that Google’s tensor processing unit (TPU) business could drive approximately $200 billion in total revenue across the next several years. The substantial forecast comes with detailed methodology backing the estimates.The most significant adjustment involves pricing assumptions. Nowak increased his TPU valuation estimates to $27bn per gigawatt, representing a notable jump from his earlier projection of $20bn/GW. Additionally, he upgraded his gross margin forecast to 30% from the previous 20% estimate.Industry reports have indicated that Google has pledged to deliver approximately one million TPU units in deals valued at roughly $35 billion. According to Nowak, this commitment supports the case for higher chip pricing than previously anticipated.The analyst also cited an enhanced custom silicon partnership between Google and Marvell as supporting evidence for the revised projections, noting that this collaboration aligns with improved TPU pricing dynamics.Google Cloud Revenue ForecastsBased on these updated assumptions, Morgan Stanley now anticipates Google will deploy 0.3 gigawatts of TPU infrastructure during the latter half of 2026, followed by 3.2 gigawatts throughout 2027, and 4.2 gigawatts in 2028.These deployment figures correspond to projected Google Cloud TPU-driven revenues of $84 billion in 2027 and $108 billion in 2028.Nowak maintained his Overweight recommendation on GOOGL shares with a $400 price objective.Technical indicators show GOOGL’s 50-day moving average at $351.57, with the 200-day moving average positioned at $341.41. Over the trailing twelve months, the stock has fluctuated within a range of $205.28 to $408.61.Wall Street Sentiment and Institutional HoldingsAnalyst sentiment remains overwhelmingly positive. The stock garners six Strong Buy ratings, 44 Buy recommendations, and four Hold ratings. The average price target among analysts stands at $420.19.Guggenheim maintains a $450 price objective on GOOGL, while Arete Research increased its target to $425 during May. JPMorgan reaffirmed its Buy stance in May as well. Zacks Investment Research shifted the stock to a Hold rating in August.Among institutional investors, Vanguard expanded its position by 2.4% during Q4, bringing its total ownership to more than 528 million shares valued at approximately $165.6 billion. Norges Bank established a fresh position valued at roughly $30.5 billion in Q4.North Dakota State Investment Board increased its GOOGL stake by 2.0% in Q2, now holding 171,763 shares with a value of $61.4 million.Alphabet disclosed its latest quarterly results on July 22nd, posting earnings per share of $9.11, significantly exceeding the consensus forecast of $2.89. Quarterly revenue reached $119.80 billion, surpassing analyst projections of $117.07 billion. The company maintains a quarterly dividend of $0.22 per share, with the next payment scheduled for September 14th.The post Morgan Stanley Upgrades Alphabet (GOOGL) Forecast on $200B TPU Chip Revenue Potential appeared first on Blockonomi.