The bank sharply raised its cloud growth forecasts as Alphabet's custom AI chips start pulling real weight
For two decades, Alphabet has been a search company that happened to own a few other things. JPMorgan thinks that description could have an expiration date.
The bank expects Google Cloud revenue to match Google Search revenue by late 2028. That would put a business once treated as a side project level with one of the most profitable products ever built.
The numbers behind the call
In mid-October 2026, JPMorgan sharply raised its growth expectations for Google Cloud. The bank now sees year-over-year cloud growth of 100% for Q3 2026 and 105% for Q4 2026. For full-year 2027, it projects 107%. Growth then cools to 63% in 2028.
A big part of the upgrade rests on sales of Alphabet’s Tensor Processing Units, or TPUs. Instead of buying all its AI hardware from outside suppliers, Google designed its own silicon tuned for machine learning. Now it sells access to that silicon to other companies.
TPU sales contributed over $1 billion in Q2 2026 alone. Analyst estimates from BNP Paribas and Evercore project external TPU sales could generate $75–113 billion in revenue by 2028.
Where the gap stands today
In Q2 2026, Google Cloud brought in $24.8 billion, up 82% from a year earlier. Search & other segments generated approximately $63 billion in the same quarter, growing 17%.
Morgan Stanley anticipates Google Cloud revenue hitting $308 billion in 2028, citing strong demand for AI infrastructure. Goldman Sachs estimates Search & other revenue will be around $275 billion by 2028.
As of Q2 2026, Google Cloud’s backlog stood at $514 billion. Half of that is expected to be recognized as revenue within 24 months.
From afterthought to profit engine
Analyst projections suggest Cloud may eventually represent as much as 46% of Alphabet’s earnings before interest and taxes, or EBIT. That figure was once just 2%.
What this means for Alphabet and investors
The TPU estimates carry the widest uncertainty. The $75–113 billion range from BNP Paribas and Evercore spans a gap of nearly $40 billion.
The next checkpoints are straightforward. Watch whether Alphabet’s Q3 2026 cloud growth comes close to the 100% JPMorgan now expects. Watch how fast the $514 billion backlog converts into recognized revenue. And watch TPU sales, since the jump from over $1 billion a quarter to the levels analysts project is where much of the bull case lives.
