1 Analyst Thinks Alphabet Stock Could Jump 20% on AI Chip Demand. Is He Right?

J.P. Morgan's Doug Anmuth lifted his Alphabet price target to $425, implying roughly 23% upside, on the argument that selling custom Tensor Processing Units (TPUs) to other AI companies is a major growth lever. The call covers GOOGL and GOOG, and it puts chip sales at the center of the bull case.

The supporting numbers are large. Google Cloud revenue surged 82% to $24.8B in Q2 2026. Anmuth believes that figure could double in Q3 as chip sales accelerate. He also points to custom processor demand projected to grow 45% annually, with potential TPU sales reaching $104B by 2028.

Interpretation: a doubling of Cloud revenue in a single quarter is an aggressive claim, and it hinges entirely on TPU sales ramping on schedule. The $104B 2028 figure is a projection, not a reported result, so the thesis rests on execution that has yet to show up in reported numbers.

The risks are on the demand side. The article flags concerns about broader AI spending and shifts in market sentiment as threats to the thesis. If AI budgets tighten, the custom-chip demand curve underpinning the $425 target could flatten.