1 Analyst Thinks Alphabet Stock Could Jump 20% on AI Chip Demand. Is He Right?
There's a good reason to be optimistic about Alphabet's chip opportunities.
Alphabet's stock has been on an upward trajectory in the artificial intelligence (AI) market, with Google Cloud sales soaring due to increased demand for the company's AI services. J.P. Morgan analyst Doug Anmuth recently raised his price target for Alphabet stock to $425, indicating a potential 23% upside from its current price.
Anmuth believes that Alphabet's custom AI processors, also known as Tensor Processing Units (TPUs), will be a key driver of this growth. These processors are highly efficient for running AI agents and specific AI models, making them attractive for companies building their own AI infrastructure. Alphabet's cloud revenue already grew 82% to $24.8 billion in the second quarter of 2026, and Anmuth predicts it could double in the third quarter if the company starts selling AI chips to other companies.
This expansion could help Alphabet capitalize on the rising demand for AI processors, which are projected to grow by 45% over the next year. Alphabet CEO Sundar Pichai has already acknowledged the growing demand for TPUs, stating that the company will begin supplying TPUs to select customers in their own data centers in the hardware configuration to expand its addressable market opportunity.
With Alphabet's current stock price trading at a relatively attractive price-to-earnings ratio of around 17, the potential for further growth in chip sales and cloud revenue could make Alphabet an appealing long-term investment for tech investors.
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