Piper Sandler sees Google TPU sales hitting $104BN by 2028

Piper Sandler analyst Thomas Champion forecasts Google's external Tensor Processing Unit (TPU) business to generate $104 billion in revenue by 2028, up from $8 billion in 2026. The firm raised its Alphabet price target to $400 from $395, citing potential growth in AI chip demand. Alphabet shares fell 0.7% in premarket trading.

Senate Democrats questioned Microsoft, Amazon, Alphabet, and Meta about AI-related tax deductions and lobbying. They cited significant tax reductions for these companies, with Microsoft's federal tax expense dropping over $11 billion and Amazon's by nearly $8 billion. The senators also noted political contributions and lobbying efforts linked to the tax breaks.

Australian Treasurer Jim Chalmers notes increased competition for capital from AI-focused 'hyper-scalers' like Alphabet (Google's parent) and Amazon, driving up bond yields. The government's debt cost rose to $27.7B, exceeding forecasts, and is projected to grow 8.8% annually. 10-year bond yields hit a 15-year high of 5.4%, double 2022 estimates. NAB's Skye Masters attributes this to higher cash rates and geopolitical risks, marking the end of an era of cheap money.

Alphabet (GOOGL) is nearing the launch of Gemini 4, an advanced AI model expected to enhance Google's search capabilities and cloud services. The company aims to compete with OpenAI and Anthropic, with Gemini already having 950 million monthly users. However, investors will be watching for returns on substantial AI investments and potential pricing pressures. Hedge funds have increased their stakes in Alphabet, with short interest remaining low.

Berkshire Hathaway, led by Greg Abel, increased its stake in Alphabet by $17 billion in Q2, making it the third-largest holding. The investment includes a $10 billion private placement and open-market purchases. Abel's focus on AI's impact on Berkshire's subsidiaries may be driving the investment strategy, differing from Warren Buffett's traditional approach.

Alphabet (GOOGL) stock fell 3% last week, closing near $344, 16% below its 52-week high. The decline was driven by broader market pressures and regulatory fines, including a €403 million GDPR penalty. Despite this, Google Cloud's 82% revenue growth in Q2 and a $514 billion backlog highlight its potential. Analysts project a 22.3% revenue growth rate, with a target price of $504, implying a 46.6% upside over 2.3 years. However, increased capital expenditures and regulatory challenges pose risks.