RBC Capital Raises Alphabet Price Target to $400

RBC Capital analyst Brad Erickson raised the price target on Alphabet (NASDAQ: GOOGL) to $400.00 (from $375.00) while maintaining an Outperform rating.

“GOOGL’s print was sterling as was expected with the substantial capex guide up ($175-185B) the only thing likely holding the stock back from a move higher.

Search (+17%) and Cloud (+48%) exceeded expectations by > $12B annualized, Gemini adoption continues narrowing the gap to ChatGPT and the GCP’s backlog accelerated (>2x y/y & +55% q/q) to $240B.

Specifically what stood out: 1) GCP growth “much higher” than Cloud segment (+48% y/y) with accelerating backlog while still acknowledging capacity constraints.

This isn’t the first supply constrained open-ended TAM anyone’s ever seen – but it is almost certainly the biggest.

2) Mgmt pointed to strong Blackwell Ultra access and near the front of the line for Rubin – raises confidence on sustaining these types of growth Cloud growth rates into ’27.

3) Gemini’s great proliferation continues: 750M MAU’s (+100M q/q), 8M enterprise paid seats in 4 months of sales, Gemini GenAI product revs +400% and still to come…Apple.

4) AI surfaces gaining traction/outsized Search growth: Daily AI Mode queries +2x since launch, 3x longer queries where the models are turning that query length/richness into revenue.

Bottom line: While the substantial capex guidance will pressure Street FCF ests, it’s driven by demand signals across Google’s distinctive integration of infrastructure, frontier LLM development, and unmatched distribution which are differentiated & essential for monetizing AI at the necessary scale.”

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