"AI’s new king" Google’s market value approaches 4 trillion; Morgan Stanley predicts: By 2027, as many as 1 million TPUs will be exported!

Alphabet is challenging Nvidia’s dominance in the artificial intelligence infrastructure sector through breakthroughs in its self-developed chips and AI models. With market expectations heating up for the external sales potential of its self-developed Tensor Processing Units (TPUs), and the successful launch of the Gemini 3 model, Alphabet’s stock has performed strongly recently, pushing its market value close to the $4 trillion mark, and is poised to reshape the competitive landscape of the global AI chip market. Morgan Stanley’s Brian Nowak team pointed out in their latest report released on Wednesday that it is not unreasonable to predict Alphabet shipping 500,000 to 1 million TPUs externally by 2027. This figure is highly significant, indicating that Alphabet’s chips will transition from solely meeting internal demand to becoming strategic assets that supply the external market amid the global shortage of computing power. According to media reports, Meta is in talks to purchase billions of dollars’ worth of Alphabet’s dedicated AI chips. This potential bulk transaction has sparked widespread speculation in the market that Alphabet may seize Nvidia’s market share and significantly boost its earnings expectations. Driven by these reports, investor sentiment on Alphabet’s stock has surged, pushing its market value closer to $4 trillion. This potential change in revenue streams has a substantive impact on Alphabet’s financial model. According to Morgan Stanley's calculations, for every 500,000 TPUs sold externally, Alphabet’s cloud business revenue will increase by 11%, and its earnings per share (EPS) will rise by 3%. The accelerated growth of its cloud business and expansion into the chip market may enable Alphabet’s stock to garner higher valuation multiples. Morgan Stanley Bullish: External TPU Sales May Become New Growth Engine Wall Street is currently focused on Alphabet’s potential in the AI chip sector. Morgan Stanley pointed out that although TPUs were originally designed for Alphabet’s internal workloads, their success and global demand for computing power have spurred strong interest from external clients. Brian Nowak analyzed that Alphabet has invested substantial resources into TPU development, especially by enhancing software features to enable compatibility with more systems. This improvement in compatibility is a key technical prerequisite for large-scale external sales. Achieving shipments of up to 1 million chips by 2027 would mark Alphabet as an important player in the AI hardware market. Challenging Nvidia’s Hegemony: Meta May Become a Key Buyer Currently, the AI chip market is highly concentrated. Third-party industry data shows that Nvidia holds around 90% of market share, helping it reach a $5 trillion market value peak less than a month ago. However, as tech giants like Alphabet begin to open up their custom chips, this monopoly may begin to loosen. Media reports about Meta potentially adopting Alphabet’s chips are seen as a direct signal for cutting Nvidia’s market share. Although Nvidia’s stock has recently corrected and its market value has dropped to $4.3 trillion, the narrowing gap between Alphabet and Nvidia indicates investors are reassessing the two companies’ relative positions in the future AI landscape. Facing potential competitive threats, Nvidia has maintained a confident stance. On Tuesday, Nvidia’s newsroom posted on social media platform X, “We’re happy for Google’s success,” while also emphasizing that Nvidia is “a whole generation ahead of the industry,” and asserted its platform is the only one capable of running every AI model and operating in any computational environment. This statement highlights the current technical rivalry in the market: Nvidia stresses its versatility and technology gap, while Alphabet is breaking through with customization advantages for specific workloads and its software ecosystem. Stock Performance: AI Momentum Pushes Market Value Near $4 Trillion Beyond excitement in the chip space, Alphabet’s progress in AI models has also provided sustained upward momentum for its stock price. The Gemini 3 model released earlier this month is widely seen as a huge success, positioning Alphabet’s large language model as a strong competitor to OpenAI’s ChatGPT. Reflected in the secondary market, Alphabet’s stock has risen 56% over the past three months, and is up 71% year-to-date, remaining near historic highs even after a 1% dip on Wednesday. In contrast, Nvidia’s stock fell 2% over the past three months, though its gains for full-year 2025 still reach 32%. This divergence in performance signals that market funds are shifting towards the “new AI king” exhibiting stronger growth potential. Risk Warning and Disclaimer The market contains risks; investment requires caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their specific situation. Investment decisions made accordingly are at your own risk.