Morgan Stanley significantly raises its forecast for Google TPU production: 5 million units by 2027, with every 500,000 units "exported" potentially adding $13 billion in revenue.

Morgan Stanley significantly raises its forecast for Google TPU production: 5 million units by 2027, with every 500,000 units "exported" potentially adding $13 billion in revenue.

In the fierce race for AI chips, Google’s self-developed TPU is revealing tremendous potential to challenge the current market landscape.

According to news from Wind Chasing Trading Desk, Morgan Stanley’s latest research report released on December 1 shows that uncertainty in the supply chain of Google’s self-developed AI chip—TPU (Tensor Processing Unit)—is dissipating. Explosive growth in production is expected over the next two years, which may be an early signal that Google is preparing to sell TPU chips to third parties on a large scale.

Based on the latest supply chain investigations, Morgan Stanley has significantly raised its production forecasts for Google’s TPU in 2027 and 2028. The forecast for 2027 has been increased from about 3 million units to about 5 million units, an increase of about 67%.

If Google TPU starts the “export” model, it will open up a new and huge source of revenue for the company. The report estimates that every 500,000 TPU chips sold could add around $13 billion in revenue and $0.40 in earnings per share (EPS) for Google by 2027.

Supply Chain Signals: Production Forecast Doubles for 2027-2028

According to Charlie Chan, semiconductor analyst at Morgan Stanley Asia, the supply chain side has sent clear signals of increased TPU orders. Based on this, Morgan Stanley adjusted future TPU supply forecasts:

  • 2027 TPU Production Forecast: From the previous roughly 3 million units, significantly raised to about 5 million units, a surge of about 67%.
  • 2028 TPU Production Forecast: From the previous roughly 3.2 million units, jumping to about 7 million units, an astonishing increase of 120%.

The report notes that this means Google will secure 12 million TPU units in just 2027 and 2028, while the total for the past four years was only 7.9 million units. This surge in production over just two years signals an unprecedented expansion in Google’s investment and deployment in AI hardware.

Potential Supply Bottleneck Broken: Early Signs of Google’s TPU Sales Strategy?

Previously, a major market doubt about whether Google would sell TPUs externally was its supply capability. Morgan Stanley previously listed “supply uncertainty” as a key constraint in its report.

However, the latest production forecast may mean this “bottleneck will no longer be a problem.” The report’s analysis suggests that while most of the additional TPU production may still be used for Google’s own business and Google Cloud Platform (GCP) customers, the sheer scale—12 million units in two years—“reveals Google’s potential to sell more TPUs via GCP and to offer them as standalone products.”

This has been interpreted as Google likely brewing a major strategic shift: from a “self-producing, self-consuming” TPU model, to direct competition with the AI chip giants in the market.

Producing 12 million TPUs in two years (compared with 7.9 million units in the previous four years) suggests Google has the potential to sell more TPUs through GCP and to provide them as a first-party separate offering.

If this strategy goes ahead, Google would shift from being merely a “consumer” and “service provider” of AI chips, to becoming a direct hardware “seller,” thereby entering the lucrative AI chip market dominated by a handful of giants.

“Money Printing” Potential: Each 500,000 External TPUs Could Add $13 Billion Revenue

For the market, the core question is: If Google really starts selling TPUs externally, how much financial return would this bring?

Morgan Stanley’s report gives an extremely attractive quantitative estimate. The report clearly points out that this potential strategy could have a considerable financial impact for Google:

“Sales of every 500,000 units of TPU chips could increase Google’s revenue by about $13 billion and earnings per share (EPS) by $0.40 in 2027.”

This data provides investors with a clear estimation model. If Google’s TPU external sales strategy is implemented successfully, even selling only a small portion of the output would contribute significant revenue and profit growth, potentially reshaping how the market values Google and having far-reaching effects on the competitive landscape of the existing AI chip market.

 

~~~~~~~~~~~~~~~~~~~~~~~~

The above content is from Wind Chasing Trading Desk.

For more detailed explanations including real-time analysis and frontline research, please join 【Wind Chasing Trading Desk ▪ Annual Membership】

Risk Warning and Disclaimer ClauseThe market has risks, and investment should be prudent. This article does not constitute personal investment advice, nor does it take into account the individual investment objectives, financial situation, or needs of users. Users should consider whether any opinions, views, or conclusions in this article fit their particular situation. Investment according to this article is at your own risk.