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Wall Street analysts had mixed reactions to Alphabet’s latest financial results, with several lowering their price targets on the Google parent due to its plans to increase its artificial intelligence spending. However, shops on the Street seem to agree that there is still a lot to like about the stock. Its top line beat analyst expectations, with cloud revenue surging more than 80% from the year-earlier period. But while Alphabet is making more money, it plans to spend more too, according to its executives. The YouTube owner said it now expects capital expenditures for the year to fall in the range of $195 billion to $205 billion, or more than the previously forecasted $180 billion to $190 billion . Shares of Alphabet sank nearly 5% ahead of Thursday’s open. Year to date, the stock is up roughly 9%, largely due to investor optimism around a boom in computing demand that has led to outsized growth in Alphabet’s Google Cloud business. The company has also made several pushes into AI, integrating its Gemini AI model into its core search product, in addition to rolling out Gemini Spark personal AI agent and Google AI Studio for developers. However, its plan to invest heavily in AI, particularly at a time when competition from China is growing, has threatened to dampen sentiment and drive down shares. Nevertheless, Alphabet seems poised to grow on its AI initiatives in the long run, even if its investment into its vision is likely to limit share growth in the near to medium-term, according to Roth analyst Rohit Kulkarni. “We are increasingly worried about [long-term] structural capital requirements to keep Google winning…[but] we view rising [capital expenditures] as necessary to capture a rapidly expanding AI [total addressable market (TAM)],” Kulkarni said Thursday in a note to clients. “What do we do now? Buy on weakness as [revenue] estimates continue to rise.” Roth has a buy rating on Alphabet. It also has a $440 price target on shares, implying 29% upside from Wednesday’s close. Here is what other shops on the Street are saying about Alphabet. Citizens: outperform, $515 Analyst Andrew Boone $515 price target suggests 51% upside for Alphabet from its Wednesday closing price. “The key debate is not the absolute level of AI CapEx, but whether the returns justify continued investment…Our point is that the economics of AI infrastructure appear sufficiently attractive that the hurdle rate for continued investment remains high, supporting the case for sustained elevated AI CapEx across the industry, rather than a near-term moderation in spending.” JPMorgan: overweight, $420 Doug Anmuth lowered his target on shares from $460. His new price target implies roughly 23% upside from Alphabet’s closing price on Wednesday. “We would be buyers of Google shares on the pullback…We continue to believe Google is showing returns on AI spending, w/its differentiated full-stack positioning evident as it monetizes across Cloud, Search, Subscriptions, & other parts of the business.” Evercore ISI: outperform, $420 Despite investors’ concerns, Alphabet could still see its shares rise to $420, which is nearly 23% above the price at which shares close Wednesday, per analyst Mark Mahaney. “We have modestly raised our Revenue and Operating Income estimates, tho we have also increased our 2027 FCF loss from $20B to $50B, due to the raised capex guidance…The latter caused the stock to sell off moderately in the aftermarket. Our view is that the Core GOOGL Long Thesis is well intact.” Cantor: overweight, $420 Deepak Mathivanan’s price target, lowered from $435, corresponds to upside of nearly 23% from Wednesday’s close. “GOOGL noted that the company is committed to reach the frontier in [large language models] with a large pre-training run for Gemini 4 currently underway. Overall, 2Q was a strong quarter for GOOGL. Shares are trading down … due to the increase in FY26E capex and limited upside on 2Q EBIT. That said, we believe that the fundamental outlook for GOOGL in 2H26E remains strong.” Citi: buy, $447 Alphabet could see upside of roughly 31%, per analyst Ronald Josey. “GOOGL’s AI investments are driving results across both Search and Cloud…we also believe GOOGL’s full-stack approach…and potential for greater model velocity with G-4 can deliver continued strong results.” Piper Sandler: overweight, $395 The investment firm lowered its price target on Alphabet from $445. Its new target is 15% above Wednesday’s close, per analyst Thomas Champion. “GOOG’s ads business is growing well and Cloud service [is] expanding at a massive clip. But, to support ~25x+ ’27 PE, the company should have a leading frontier model. We await the release of Gemini 3.5 Pro and later 4.0.” Jefferies: Buy, $445 The bank’s price target signals 30% upside ahead. In our view, the core search business is still attracting incremental ad dollars in the shift to digital and mobile. YouTube is the best-positioned platform to take advantage of a sizable online video opportunity. Google Cloud could be the next break-out play for shares. Call options in place for both the near and longer term: GCP, AI, Google Home, Pixel, YouTube TV, Waymo. RBC: Outperform, $425 Analyst Brad Erickson reiterated his rating on the stock and price target. We could be in for a bit of a holding period as investors contemplate cash burns and paying margin depressing rent for compute but bigger picture, we believe data, compute & distribution remain a long-term combo for success in AI which few others possess, and keeps us at OP. Pivotal Research: Buy, $475 Analyst Jeffrey Wlodarczak raised his target from $470. We continue to believe that Alphabet is the most well positioned of its peers to monetize its massive AI investment across all its properties by leveraging its proprietary TPU/Axion stack (and its major cost advantages over players such as MSFT), its dominant distribution position, and its solid AI to take market share, cementing Gemini as the dominant AI platform on 4B+ handsets.
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