TLDR
- Pivotal Research sets new Wall Street high with $400 price target for Alphabet stock, up from $350
- Analyst cites dominance across search, YouTube, and Gemini AI as key drivers for 25% potential upside
- Custom Tensor Processing Units could cut AI costs and boost cloud computing profitability
- Wall Street Buy ratings increased to 84% from 80% last year as investor confidence surges
- Stock now trades at 30 times 2026 earnings versus 20 times a year ago
Pivotal Research analyst Jeff Wlodarczak raised his Alphabet price target to $400 on Friday, the highest on Wall Street. The new target, up from $350, suggests 25% upside from current levels. He kept his Buy rating intact.
The move marks a dramatic shift from just one year ago. Back then, the highest Street target stood at $240. Now, the second-highest target sits at $380, according to FactSet.
Wlodarczak says Alphabet is “winning everywhere.” Google search continues to generate massive cash flow. The Gemini AI assistant keeps improving. YouTube dominates as the world’s top video streaming platform.
Investor concerns from late 2024 have evaporated. Worries about ChatGPT disruption and antitrust breakup threats have given way to optimism. The company now appears positioned to capitalize on the AI boom rather than fall victim to it.
Custom Chips Drive Competitive Edge
Alphabet’s proprietary Tensor Processing Units work alongside Nvidia GPUs for AI computing. These chips focus on one thing: lowering costs.
Cheaper AI task completion could “accelerate their cloud computing market share and profitability,” Wlodarczak wrote. He believes Alphabet leads peers in monetizing AI investments both inside and outside the company.
Fellow Pivotal analyst Michael Levine calls Gemini one of the strongest AI systems available. He credits years of development work and data accumulation that competitors can’t easily replicate.
The routing of more searches through Gemini on mobile devices keeps more profit within Alphabet. Apple now pays for Gemini access, boosting margins and freeing capital for reinvestment.
Five Billion Users Create Distribution Moat
Gemini reaches over five billion users across Alphabet’s product lineup. Levine sees this distribution advantage as unmatched in the industry.
Most users stick with default apps on their devices. This behavior could make Gemini the standard AI assistant for phones and smart glasses. Levine expects Gemini to capture even more ground in 2026.
He warned that OpenAI might hit rough patches ahead. Rising expenses and slowing growth could force spending cuts. But Alphabet appears well-equipped to handle any AI sector volatility.
Wall Street Sentiment Shifts
Analyst confidence has climbed sharply. Currently, 84% of analysts rate Alphabet stock a Buy, up from 80% last year. For context, the average S&P 500 stock gets Buy ratings from only 55% of analysts.
The average price target now stands at $332, jumping from $211 twelve months ago. Targets now value the stock at roughly 30 times projected 2026 earnings. Last year, that multiple was just 20 times.
Earnings estimates for 2026 have increased only 10% over the past year. Yet the stock has soared more than 80%. The gap reflects surging confidence in Alphabet’s execution ability.
Levine sees the TPU strategy as particularly smart. The chips either capture market share from Nvidia or push GPU prices down. Both scenarios benefit Alphabet’s margins.
Wall Street consensus stands at Strong Buy based on 29 Buy recommendations and seven Hold ratings. The stock traded at $318.88 in premarket action.
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