Mizuho Lifts Alphabet Target To $460 On TPU And Cloud Surge

Mizuho’s Lloyd Walmsley walked into Wednesday with a number Wall Street wasn’t ready for. He raised his Alphabet price target to $460 from $420 and told clients the Street is still missing what’s happening inside Google Cloud and the company’s tensor processing unit business. The note, dated May 6, 2026, lands a week after Alphabet posted Q1 results that already shocked analysts, and it argues those numbers were just the appetizer.

Walmsley’s bull case rests on three numbers: a $462 billion Cloud backlog, a 70% Cloud growth forecast for full-year 2026, and roughly $61 billion in TPU hardware revenue he expects Alphabet to recognize through 2027. Each one sits above consensus. Together they imply earnings power the sell-side hasn’t priced in.

The $40 Price Target Hike, In Plain Numbers

Mizuho’s outperform rating stays. The price target moves from $420 to $460, an 18.4% upside from Tuesday’s close. That’s the headline.

Walmsley raised his 2026 EPS estimate to $11.81 from a Street consensus of $11.62. His 2027 number jumps to $14.04 versus consensus of $13.56. He told clients the Street “under-models Google Cloud revenue and operating income potential over the next two years.” His forecast: Cloud grows 70% in 2026, then 59% in 2027. Consensus has 58% and 47%.

The methodology is what makes the call different. Walmsley wrote that his analysis combines “the latest cloud backlog data” with “hardware sales estimates from our supply chain team.” That second input is the goldmine. Most equity analysts model Cloud off reported revenue and management commentary. Walmsley is reading TPU shipment forecasts off Asian supply chains and pulling them forward into his Cloud number.

Why The $462 Billion Backlog Changes The Math

Alphabet’s Q1 2026 earnings release disclosed Google Cloud backlog of $462 billion, up from $240 billion at the end of Q4 2025. That’s a $222 billion sequential jump in 90 days. CFO Anat Ashkenazi told analysts more than 50% of the backlog converts to revenue inside 24 months.

Do the arithmetic. That implies more than $230 billion in already-contracted Google Cloud revenue is scheduled to be recognized by mid-2028. Cloud’s full-year 2025 revenue was roughly $50 billion. The backlog alone now represents more than four years of last year’s run rate, locked in by signed contracts.

The composition matters as much as the size. Ashkenazi said the spike was driven by enterprise AI demand and, critically, by the inclusion of TPU hardware sales for the first time. Alphabet has agreed to ship TPUs directly to select customers’ own data centers, a model break the company resisted for years. Those agreements now sit inside the backlog.

What Pichai Said On The Call That Mainstream Coverage Skipped

The line getting quoted is Pichai’s admission that “we are compute constrained in the near term” and that “our cloud revenue would have been higher if we were able to meet the demand.” That’s the soundbite. The detail buried later in his prepared CEO remarks is more interesting.

Pichai disclosed that the number of $100 million to $1 billion Cloud deals doubled year over year. New customer acquisition also doubled. Existing customers outpaced their initial commitments by 45% quarter over quarter. Those are the figures that drove backlog from $240 billion to $462 billion. They tell you the demand isn’t a handful of frontier AI labs. It’s broad enterprise pull.

The TPU Story Is Now A Hardware Story

Until October 2025, TPUs were a Google Cloud product. You rented them through GCP. You couldn’t put one in your own rack. That changed.

The shift began with Anthropic’s October 2025 expansion, which committed to up to one million TPU chips and over a gigawatt of capacity in 2026. It accelerated in April with Anthropic’s gigawatt-scale partnership with Google and Broadcom, covering approximately 3.5 gigawatts of next-generation TPU capacity starting in 2027. The Information reported May 5 that Anthropic’s total compute commitment runs to roughly $200 billion over five years.

Meta is the other anchor. The Information reported in late February that Meta signed a multiyear, multibillion-dollar deal to rent Google TPUs through Google Cloud, with separate talks underway to deploy TPUs on-premises in Meta data centers starting in 2027. If those talks close, Meta becomes the first hyperscaler to run someone else’s custom AI silicon at scale inside its own walls.

The Margin Profile Walmsley Is Underlining

The reason Walmsley’s note moves the EPS line, not just the revenue line, sits in one sentence: he wrote that TPU hardware sales “can generate at least the margins of the traditional compute rental business.” That’s a strong claim. Cloud rental margins ran 32.9% in Q1 2026, up from 17.8% a year earlier.

The implication, which Walmsley spelled out, is that if a chunk of that hardware revenue converts to “asset-light royalty-like economics,” the operating leverage is bigger than the Street is modeling. Alphabet doesn’t pay to host the customer’s data center. The customer does. Alphabet collects on the silicon and software stack.

The Numbers At The Center Of The Call

• $462 billion: Google Cloud backlog at end of Q1 2026, up from $240 billion in Q4 2025.
• $20.0 billion: Q1 Cloud revenue, up 63% year over year.
• $6.6 billion: Q1 Cloud operating income, roughly 3x year over year.
• 32.9%: Q1 Cloud operating margin, up from 17.8% in Q1 2025.
• $35.7 billion: Q1 capital expenditure.
• $180 to $190 billion: Full-year 2026 capex guide, raised from $175-$185 billion.
• $61 billion: Mizuho’s estimate of TPU hardware revenue through 2027.

Where Walmsley Sits Versus The Rest Of Wall Street

The $460 target isn’t even the highest on the Street. China Renaissance moved to $485. Canaccord Genuity went to $450 on April 30. New Street Research also lifted to $450. Barclays sits at $405 with overweight. LSEG data shows 53 of 61 analysts covering Alphabet rate it buy or strong buy.

What’s distinctive about Mizuho’s note is the supply-chain method. Most analysts can model Cloud backlog. Few are pulling TPU shipment data from Asian fabs. That’s where the EPS delta comes from.

Consensus estimates continue to significantly under-model Google Cloud revenue and operating income potential over the next two years.

Walmsley wrote that line in his Wednesday note to clients. It’s the thesis statement. Everything else in the call follows from it.

The Capex Question Bears Are Pointing At

The bear case isn’t that Cloud is weak. It’s that Alphabet is spending too much to capture it. Full-year 2025 capex was $91.45 billion. The 2026 guide of $180 to $190 billion roughly doubles that. Ashkenazi told analysts 2027 capex will rise “meaningfully” again.

Free cash flow tells the story. Alphabet’s full-year 2025 free cash flow was $73.27 billion, essentially flat year over year despite the capex ramp. Bears argue the returns haven’t materialized at scale yet, and a recession or AI demand slowdown would leave the company with stranded data center capacity.

The counterpoint Walmsley implicitly makes: if Cloud is supply-constrained today, every additional dollar of capex is a direct revenue unlock. Pichai’s line about leaving revenue on the table because of compute constraints isn’t rhetoric. It’s the operational definition of a high-return capex regime.

The Competitive Frame: TPU Versus Nvidia

Nvidia still dominates. The company holds north of 80% share in AI training workloads, anchored by CUDA and a software stack that took 15 years to build. Migrating from CUDA to Google’s XLA framework requires rewriting code, retuning performance bottlenecks, and in some cases adopting new frameworks entirely.

What’s changing is the economics on inference. SemiAnalysis’s deep dive on TPUv7 Ironwood reported that TPUs run roughly 2x cheaper than comparable Nvidia GPUs at 9,000-chip scale, with better performance per watt for inference workloads. Anthropic’s published rationale for the partnership says exactly this: TPU pricing runs 40% to 50% below comparable Nvidia configurations.

DA Davidson’s December 2025 estimate, repeated in subsequent notes, is that Alphabet could capture up to 20% of the global AI chip market in the medium term if it expands TPU availability beyond Google Cloud. The Anthropic Broadcom deal, formalized in Broadcom’s 8-K filing, is the structural step toward that 20%.

The TPU Roadmap Anchored By One Customer

Google made Ironwood (TPU v7) generally available at Cloud Next 2026 in April. The chip delivers 4.6 petaflops per chip and 42.5 exaflops in a 9,216-chip superpod. Alphabet also previewed the v8 generation: TPU 8t, codenamed Sunfish, designed by Broadcom for training, and TPU 8i, codenamed Zebrafish, designed by MediaTek for inference. Both target TSMC’s 2nm process and ship in late 2027.

Anthropic is the anchor for both generations. Its compute commitment scales from over 1 GW of Ironwood in 2026 to roughly 3.5 GW of v8 capacity starting in 2027. The deployment runs through 2031 under Broadcom’s supply assurance agreement with Google.

The Quote That Frames The Counter-Argument

Not everyone reads Q1 the way Mizuho does. Speaking on CNBC’s coverage of the print, D.A. Davidson analyst Gil Luria said the capex ramp deserves more scrutiny, given that free cash flow has stalled while spending has roughly doubled. “The market wants Alphabet to spend whatever it takes to win AI,” Luria has argued in prior notes. “That’s a fine bet right up until demand slips a quarter and you’re sitting on stranded capacity.”

That’s the bear-side mirror image of Walmsley’s call. Both sides agree Cloud is accelerating. They disagree on whether the capex compounds the win or compounds the risk.

What This Means For The Stock

Alphabet shares are up roughly 27% year to date heading into May. The stock has been the top performer among megacap tech in 2026, propelled by Cloud reacceleration and the AI Mode rollout in Search. Mizuho’s $460 target sits above current price levels but inside the cluster of recent buy-side calls.

The catalyst calendar from here is straightforward. Q2 earnings in late July will be the first quarter where TPU hardware revenue starts hitting the income statement in measurable form. Anthropic’s first 1 GW of Ironwood capacity comes online through 2026. Meta’s on-premises TPU talks, if they close, would be a second-half 2026 event. Each is a discrete data point against Walmsley’s thesis.

The internal-linking context for readers tracking Alphabet’s broader AI monetization push: Alphabet has also been quietly opening up new revenue surfaces in its consumer AI app, as covered in our reporting on Google’s plan to bring ads to the Gemini app after the Q1 print. The enterprise Cloud story and the consumer Gemini story are two sides of the same monetization push, with TPU sitting underneath both.

Frequently Asked Questions

How Much Does Mizuho Think Alphabet Stock Could Rise?

Mizuho’s new $460 price target on Alphabet implies 18.4% upside from the May 5, 2026 closing price. That’s a 12-month outlook, not a guarantee. Walmsley raised his 2026 EPS estimate to $11.81 and his 2027 estimate to $14.04, both above Street consensus. The bull case requires Google Cloud revenue growth of 70% in 2026, which is 12 percentage points above current consensus.

What Is The Google Cloud Backlog And Why Did It Jump To $462 Billion?

Backlog is the dollar value of signed Cloud contracts not yet recognized as revenue. Alphabet’s Q1 2026 backlog hit $462 billion, up from $240 billion three months earlier. The jump came from two sources: enterprise AI deal momentum, with $100 million to $1 billion contracts doubling year over year, and the first-time inclusion of TPU hardware sales delivered to customers’ own data centers. Just over half converts to revenue within 24 months.

Will Google Sell TPUs Directly To Companies Like Nvidia Sells GPUs?

Yes, but selectively. Alphabet confirmed in Q1 it will deliver TPU hardware to select customers’ own data centers starting later in 2026, with most revenue recognized in 2027. The buyer list so far includes Anthropic, with Meta in advanced talks for 2027 deployment. Google is not running an open commercial channel like Nvidia. Each on-premises deal is negotiated individually, anchored to gigawatt-scale commitments.

How Does The TPU Compete With Nvidia On Price?

TPUs run roughly 40% to 50% cheaper than comparable Nvidia GPU configurations on inference workloads, per pricing data published in connection with the Anthropic deal. Performance per watt is also better on TPUs for inference. Nvidia retains an advantage in training, in software ecosystem maturity, and in framework flexibility. Most large AI labs run multi-vendor strategies, adding TPU capacity rather than replacing Nvidia outright.

Should I Buy Alphabet Stock Based On This Analyst Note?

This article reports on analyst opinions and is not a recommendation to buy or sell any security. Mizuho is one of 61 analysts covering Alphabet; 53 of them have buy or strong buy ratings per LSEG. Targets range from $405 (Barclays) to $485 (China Renaissance). Use the analyst views as one input among many. Verify the latest price, your time horizon, and your risk tolerance with a licensed financial advisor before acting.

The next real test arrives with Q2 earnings in late July, when the first measurable TPU hardware revenue should appear on the income statement. Until then, Walmsley’s $460 target is a hypothesis with one specific number behind it. The supply-chain data either confirms it or doesn’t.

Disclaimer: This article reports analyst opinions and earnings disclosures and does not constitute investment advice. Equity prices and analyst price targets fluctuate, and past performance does not indicate future results. Readers should consult a licensed financial advisor before making investment decisions in Alphabet or any related security. All figures, price targets, and forecasts cited are accurate as of publication on May 9, 2026 and may change without notice.