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Alphabet Could Add 9 GW of Compute Capacity in 2028, Morgan Stanley Says

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Alphabet (GOOGL, GOOG) could add 9 gigawatts of compute capacity in 2028 and sell 4 gigawatts of tensor processing units on a first-party basis, Morgan Stanley said in a note emailed Tuesday.

Alphabet's stock has declined 10% over the last month as investors have favored hardware and semiconductor plays, according to the note. However, Morgan Stanley said Alphabet's fundamentals and visibility into 2027 and 2028 are improving, creating a tactical buying opportunity.

Given the compute constraints in mid-2026, Morgan Stanley believes investors should focus on 2028 and the capacity onboard, revenue and capital expenditure ahead, the note added.

Morgan Stanley raised company-wide revenue by 4% and 1% for 2027 and 2028, respectively, as it now expects the Google Cloud segment to grow 106% and 44%, reaching $214 billion and $308 billion of revenue, respectively. It also raised 2027 and 2028 EPS estimates by 4% and 1%, and now models an EPS of $19 in 2028.

Morgan Stanley kept an overweight rating on Alphabet and raised the price target to $415 from $375.

Price: $354.83, Change: $+1.18, Percent Change: +0.33%

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