Barclays: Google's 'TPU-as-a-Service' Could Boost 2028 Profit by Over 15%

Alphabet is positioned to launch a significant new AI infrastructure initiative, a "TPU-as-a-service" (TPU-aaS) model, that could lift its 2028 gross profit by approximately 15%, according to a new analysis from Barclays. The firm argues that the market is underestimating the long-term earnings potential of this direct-to-developer hardware access model.

A New AI Compute Model

Barclays anticipates that Google will begin selling access to its proprietary Tensor Processing Units (TPUs) directly, a departure from its current strategy of offering them exclusively through Google Cloud. The brokerage noted that the new service will initially support AI developer Anthropic, with the potential to expand to other AI labs in the future.

This strategic shift is expected to broaden AI compute capacity across the industry. For Google, it could also improve capital efficiency by moving toward a more asset-light infrastructure model, the analysts said.

Significant Financial Upside

Barclays has significantly raised its revenue and operating income forecasts for Google Cloud to incorporate the potential impact of TPU-aaS. The firm projects the new business could generate roughly $250 billion in revenue by 2028.

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This figure represents more than a one-third upside to the current consensus revenue estimates for Alphabet in 2028, according to the report. The initiative is seen as a material driver for Google Cloud's long-term growth profile and a significant expansion of Alphabet's operating income.

Ecosystem-Wide Benefits

According to Barclays, the TPU-aaS model offers distinct advantages for multiple parties in the AI ecosystem:

• AI Developers: Labs like Anthropic would gain greater control over their computing infrastructure and reduce their dependence on traditional hyperscaler cloud agreements.
• Infrastructure Partners: Companies such as Broadcom, Blackstone, and Fluidstack could see expanded demand for AI hardware, financing, and data center management.

In light of this potential, Barclays maintained its Overweight rating and $425 price target on Alphabet stock, stating that the TPU-aaS opportunity is not yet fully reflected in investor expectations.