Google TPU is expected to capture a 20% market share, opening up a $900 billion business opportunity for Alphabet

Google parent company Alphabet has recently attracted significant market attention with its in-house AI chip, the TPU. Originally designed primarily for Google Cloud as an accelerator chip, the TPU is now seen by Wall Street as potentially unlocking a new business opportunity worth nearly $900 billion, with prospects of capturing 20% market share in the AI sector over the next few years. From massive orders with Anthropic to reports that Meta is also in talks to adopt it, Alphabet’s AI strategy is being regarded as one of the core reasons for the company’s 30% stock surge in the fourth quarter.

Stock Surge Driven by TPU Momentum

Reports indicate that Alphabet’s stock soared approximately 30% in the fourth quarter, making it one of the standout tech stocks on the S&P 500. The prevailing view is that the main driver is the strong performance of Google’s in-house AI chip, the TPU.

The TPU has long been considered the cornerstone of Google Cloud’s competitiveness, and now the market is betting that Alphabet will officially begin selling the TPU externally, opening up an entirely new revenue stream for the company.

Enterprises Seek NVIDIA Alternatives, TPU Demand Rises Rapidly

Gil Luria, Head of Technology Research at US financial services firm DA Davidson, points out that many enterprises hope to reduce dependence on (NVIDIA), and the TPU is currently one of the most viable alternatives.

He predicts that if Alphabet truly enters the chip sales market, the TPU could capture 20% of the AI market in the next few years, representing around $900 billion in potential business. Luria adds that even without direct chip sales, the TPU can enhance Google Cloud’s efficiency and cost advantages.

In response to calls for more diverse chip supply, NVIDIA officials have also cited CEO Jensen Huang, emphasizing that true competition is about team strength, and there are actually few companies capable of building such complex chips. This may serve as a reminder to the market that NVIDIA’s lead isn’t just about the product—it’s about the entire team and technical depth, which are difficult to catch up with quickly.

Anthropic and Meta in Talks to Procure TPUs, Further Boosting Alphabet Stock

At the end of October this year, Alphabet announced it would provide Anthropic with AI chips worth “tens of billions” of dollars, driving the company’s stock up more than 6% in two days. Reports then surfaced that Meta is also negotiating to invest “billions of dollars” to adopt TPUs, once again pushing Alphabet’s stock higher.

TPUs are ASIC chips. While their use cases are more limited, their cost is lower than GPUs, making them a perfect fit for enterprises seeking to reduce costs and improve efficiency in AI investments.

Gemini Boosts TPU, Market Expectations Rise Across the Board

Alphabet’s latest AI model, Gemini 3 Pro, has received excellent reviews since launch, and its optimized architecture for TPUs has further boosted market confidence in the long-term competitiveness of the TPU.

Although there are external expectations for Alphabet to aggressively sell TPUs, the company itself has not yet made a clear decision. However, (Morgan Stanley) analyst Brian Nowak believes Alphabet may have already decided to launch a TPU sales strategy.

Their Asia semiconductor team estimates that demand for TPUs will surge to 5 million units by 2027 and 7 million units by 2028, representing increases of 67% and 120%, respectively.

Considerable Revenue Contribution, Valuation Remains Relatively Attractive

Morgan Stanley estimates that, if Alphabet sells 500,000 TPUs to external data centers, it could generate about $13 billion in additional revenue and contribute $0.4 to earnings per share.

The market expects Alphabet’s 2027 revenue to reach approximately $447 billion, so an additional $13 billion would represent nearly 3% growth. In the past three months, market expectations for the company’s 2027 revenue have already been raised by over 6%.

This article, “Google’s TPU Expected to Capture 20% Market Share, Unlocking a $900 Billion Opportunity for Alphabet,” first appeared on Chain News ABMedia.