NEW YORK, June 8, 2026, 11:02 EDT
Google parent Alphabet has placed an order for over 3 million TPUs with Intel for 2028, The Information reported, as the company moves its AI chip game further in-house. Wall Street is watching to see if the AI ramp leads to margin pressure. Reuters said it couldn’t verify the report.
Piper Sandler hiked its Alphabet price target to $445 from $425 on strong gains from Google’s AI-driven search, but UBS flagged that moving Google Cloud’s TPU backlog into revenue faster could weigh on margins.
Alphabet is looking for more money from investors for its buildout. The Google parent boosted its equity offerings to $84.75 billion last week, up from the $80 billion it first planned. The move is part of a bigger effort to raise cash for AI infrastructure and computing, as big tech firms compete for more data-center space.
Alphabet shares slipped $6.32 to $362.21, while Intel jumped after the latest chip report. Nvidia, which still leads in AI chips, moved higher. Investors are watching the AI supply chain.
Piper Sandler’s Thomas Champion lifted the price target after doing the firm’s first look at citation data in Google’s AI Overview and AI Mode tools, features that organize or answer search queries using AI. Piper tracked citations in AI-powered search and saw them jump about 16 times since early 2025. Alphabet properties, including YouTube, had a 19.2% share of those citations, the firm said.
Bulls say AI could be boosting Google Search instead of hurting it. Piper lifted its search revenue view for 2026 by 1% and for 2027 by 5%. The firm noted that citations aren’t equivalent to query or revenue growth.
UBS is sticking to a neutral on Alphabet, even after bumping up its Google Cloud revenue estimates—by about 24% for 2026 and 34% for 2027, according to Finimize. The bank left its $410 target unchanged. UBS flagged that as revenue skews heavier toward TPUs, it could look more like low-margin hardware than high-margin software. Operating margin at Google Cloud could fall to 27.3% by 2027, UBS said.
Alphabet’s first quarter numbers are driving the debate. Revenue climbed 22% to $109.9 billion. Google Cloud revenue jumped 63%, hitting $20.0 billion. The Cloud business posted a 32.9% operating margin. The company reported a Google Cloud backlog of $462 billion, saying just over half should convert to revenue in the next 24 months.
Alphabet CEO Sundar Pichai told investors in April that the company’s “AI investments and full stack approach” are driving growth, noting Search revenue rose 19% and Cloud backlog almost doubled. Alphabet boosted its 2026 capex outlook to between $180 billion and $190 billion, and said spending in 2027 would climb much higher. SEC
This isn’t just about cloud. Google is backing its TPUs as rivals to Nvidia’s GPUs, while the AI chip squeeze keeps TSMC in Taiwan under strain. “AI’s biggest players are racing to diversify a supply chain still heavily concentrated in TSMC,” Jacob Bourne, technology analyst at eMarketer, told Reuters. Reuters
There’s a policy angle as well. D.A. Davidson’s Gil Luria told Reuters both Google and Nvidia now have extra incentive to work with Intel, saying “supporting Intel supports U.S.-based manufacturing,” which is important as Washington pushes to ramp up chip output at home. Reuters
Alphabet is putting money into AI now but it’s not clear how quickly investors will see that pay off. If TPU sales push up revenue but at the cost of weaker Cloud margins, or if AI-powered search doesn’t pull in as much money as hoped, then the $84.75 billion equity raise could start to look less like a smart financial move and more like a signal that the AI push is eating up more capital than Alphabet’s strong cash flow can handle.
Seeking Alpha’s Rick Orford on June 3 called Alphabet a “Strong Buy,” saying the stock’s cloud backlog and AI efforts aren’t fully priced in yet. That’s the positive spin. The real question now is if higher AI use in Search and Cloud actually adds to earnings, or just boosts infrastructure spending. seekingalpha.com
