This article first appeared on GuruFocus.
Alphabet (NASDAQ:GOOGL) has seen investor optimism as its in-house AI chips, called TPUs, are being valued by a top analyst at about $900 billion, after the stock jumped about 30% in the fourth quarter.
D.A. Davidson’s Gil Luria, a renowned analyst, told clients that TPUs, specialized processors for machine learning used in Google Cloud, could capture roughly 20% of the AI chip market if Alphabet sells them to third parties.
Recent deals and reports have fueled the view. Alphabet said it would supply chips to Anthropic, and The Information reported Meta Platforms (NASDAQ:META) may pay for TPU access. That interest suggests TPUs might move beyond internal use.
TPUs are designed for specific AI workloads, unlike Nvidia (NASDAQ:NVDA) general-purpose accelerators, which analysts say makes them more efficient for certain tasks.
Morgan Stanley analyst Brian Nowak estimated selling 500,000 chips to data centers could add about $13 billion to 2027 revenue and roughly $0.37 to earnings per share, underscoring potential upside while questions about go-to-market strategy remain.
Based on the one year price targets offered by 58 analysts, the average target price for Alphabet Inc is $309.96 with a high estimate of $390.00 and a low estimate of $185.00. The average target implies a downside of -2.41% from the current price of $317.62.
Based on GuruFocus estimates, the estimated GF Value for Alphabet Inc in one year is $228.14, suggesting a downside of -28.17% from the current price of $317.62. gf value is gurufocus’ estimate of the fair value that the stock should be traded at. it is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business’ performance. for deeper insights, visit the forecast page.