Key Takeaways
- Alphabet shares declined approximately 4% following news that Gemini 3.5 Pro launch has been postponed after underperforming internal testing standards
- First quarter fiscal 2026 earnings per share reached $5.11 versus analyst expectations of $2.63 — representing a massive 94% earnings surprise — while revenues climbed 21.8% to $109.90 billion
- Wedbush Securities launched coverage with the highest Wall Street price target of $671, characterizing the pullback as an attractive entry point
- BMO Capital analyst Brian Pitz increased his price objective to $455 from $435, maintaining his Buy recommendation
- Among 64 Wall Street analysts tracking GOOGL, 57 have Buy or Strong Buy ratings with no Sell recommendations
Alphabet (GOOGL) shares finished Friday’s trading session at $354.46, marking a 4.44% decline from the opening price near $373. The catalyst behind the sell-off: emerging reports indicating Google’s upcoming Gemini 3.5 Pro artificial intelligence model has encountered delays after falling short of internal performance standards.
The market reaction stands in stark contrast to Alphabet’s exceptional quarterly performance. The company’s first quarter fiscal 2026 earnings per share of $5.11 substantially exceeded the $2.63 analyst consensus — delivering a remarkable 94% upside surprise. Total revenues reached $109.90 billion, representing 21.8% growth compared to the prior year period.
Google Cloud emerged as the star performer, surging 63% to $20.03 billion with its contracted backlog nearly doubling on a sequential basis. The current backlog stands at an impressive $460 billion.
Concerns about artificial intelligence talent retention intensified selling pressure. Gemini project co-leader Noam Shazeer made a surprising return to OpenAI shortly after rejoining Google via the Character.ai transaction. Additionally, Nobel Prize winner John Jumper left DeepMind to join Anthropic. These high-profile departures raised questions about Google’s ability to retain top-tier AI talent.
Despite these concerns, analyst sentiment remains overwhelmingly positive.
Wedbush Announces Street-Leading Price Target
Wedbush analyst Ygal Arounian launched coverage Thursday with a Buy recommendation and a $671 price objective — establishing the highest target among all analysts tracking the stock. Arounian characterized the Gemini postponement as a “temporary blip” and positioned the recent weakness as an opportune buying moment.
The $671 target implies approximately 90% potential upside from current trading levels.
BMO Capital’s top-ranked analyst Brian Pitz maintained his conviction as well. He reaffirmed his Buy stance and elevated his price target to $455 from $435, driven by enhanced Google Cloud projections for fourth quarter and full-year 2027, revised upward by 2% and 13% respectively. Pitz attributed his optimistic outlook to expanding infrastructure capacity and sustained cloud computing demand.
The average analyst price target stands at $437.79, suggesting approximately 26% upside potential from Friday’s closing price. One particularly bullish forecast of $515 implies as much as 45% appreciation.
Berkshire Investment and Technology Sector Weakness
Friday’s decline wasn’t isolated to Alphabet. Broader technology sector weakness impacted AI-focused stocks across the board. META declined 3.19%, MSFT retreated 2.14%, and NVDA lost 1.17%. GOOGL’s sharper drop indicated the Gemini news amplified general market weakness.
Warren Buffett, now with successor Greg Abel at the helm, revealed Berkshire Hathaway established an Alphabet position through a $10 billion private placement transaction. Buffett highlighted artificial intelligence capital spending as the primary risk factor — Alphabet’s capital expenditure growth reduced free cash flow by 46.63% year-over-year in the first quarter.
Friday’s trading volume registered 10.79 million shares, significantly below the three-month daily average of 34.05 million.
Despite the single-day decline, GOOGL maintains an 11.11% gain year-to-date and has appreciated 91.54% over the trailing twelve months.
Among 64 analysts covering the stock: 14 rate it Strong Buy, 43 assign Buy ratings, 7 recommend Hold, and zero suggest Sell.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
