Hua Er Jie Jian Wen·2025-12-01 06:57Core Insights - Google's self-developed AI chip, TPU, is showing significant potential to challenge the existing market landscape as supply chain uncertainties are diminishing [1][4] - Morgan Stanley's report indicates a substantial increase in TPU production forecasts for 2027 and 2028, suggesting a strategic shift towards external sales [2][6] Supply Chain Signals - Morgan Stanley's analysis reveals a clear increase in TPU orders, leading to a revised forecast of 12 million TPUs for 2027-2028, compared to a total of 7.9 million over the past four years [2][4] - The anticipated production surge indicates Google's accelerated investment and expansion in AI hardware [2] Production Forecasts - The production forecast for 2027 has been raised from approximately 3 million to about 5 million units, reflecting a 67% increase [6] - For 2028, the forecast has jumped from around 3.2 million to 7 million units, marking an impressive 120% increase [6] Strategic Shift - The new production data suggests that Google's previous supply constraints may no longer be an issue, allowing for a potential shift from an internal-use model to competing directly in the AI chip market [4] - The projected production of 12 million TPUs over two years indicates the potential for Google to sell more TPUs through its Google Cloud Platform (GCP) and as standalone products [4] Financial Implications - Each sale of 500,000 TPU chips could generate approximately $13 billion in revenue and $0.40 in earnings per share (EPS) for Google in 2027 [5][7] - Successful implementation of the TPU external sales strategy could significantly enhance Google's revenue and profit growth, potentially reshaping market valuations and the competitive landscape in the AI chip sector [7]