Overview
- On Tuesday Morgan Stanley raised its TPU price and margin assumptions to $27 billion per gigawatt and 30% gross margin and said those inputs imply roughly $200 billion in cumulative TPU revenue over the next several years.
- Alphabet began recognizing revenue from TPU systems in Q2 2026 and has ramped capital spending and financing to build data center and server capacity, with Q2 capex reported at $44.9 billion and 2026 guidance of $175–185 billion.
- Morgan Stanley projects deployments of 0.3 gigawatts in the second half of 2026, 3.2 gigawatts in 2027 and 4.2 gigawatts in 2028, which the firm translates into about $84 billion in TPU‑related Google Cloud revenue in 2027 and $108 billion in 2028.
- Some inputs that support the bullish view are still developing: reports of a ~1 million‑unit TPU commitment worth roughly $35 billion and an expanded Marvell deal are cited by analysts but remain limited and not fully confirmed.
- The main risks are execution and financing: the thesis depends on large, sustained customer commitments, continued heavy capex and successful debt and equity financing, and observers should watch Google Cloud backlog, Gemini usage and announced TPU shipments for signs the forecasts are materializing.