KeyBanc Raises Alphabet Price Target to $425

KeyBanc analyst Justin Patterson raised the price target on Alphabet (NASDAQ: GOOGL) to $425.00 (from $380.00) while maintaining an Overweight rating.

“Where we feel better: 1) Cloud momentum is even stronger than envisioned Cloud revenue increased +63% y/y to $20.0B (3% above us and 9% above the Street), with GCP meaningfully outpacing segment growth and Workspaces achieving double digit growth.

Backlog nearly doubled again to $462B, reflecting demand for AI offerings and the inclusion of TPU hardware sales.

Consistent with prior quarters, just over 50% of backlog is expected to be recognized over the next 24 months.

Given Cloud’s momentum, we have raised our forecast, which had previously been well ahead of consensus, by 13% in 2026E to $97B and 26% in 2027E to $148B.

Based on the sheer size of backlog, we believe our new estimates may still prove to be conservative.

2) Search growth remains solid – Search revenue increased +19% y/y to $60.4B, and was 2% above our/Street forecasts.

The deployment of Gemini across the entire ads infrastructure appears to be benefiting ad relevancy, which we view as a positive for both paid clicks and pricing.

With Google I/O approaching in May, we see potential for new devices and ongoing multimodal AI innovations to continue evolving the Search experience.

3) Subscription opportunity is scaling – Google now has 350M paid subscriptions, with YouTube and Google One being the key drivers.

We expect Gemini subscriptions (consumer facing) and personal health (we expect this could be unveiled at Google I/O) to become larger contributors over time.”

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