Goldman Sachs Raises Alphabet Price Target to $450

Goldman Sachs analyst Eric Sheridan raised the price target on Alphabet (NASDAQ: GOOGL) to $450.00 (from $400.00) while maintaining a Buy rating.

“We recap Alphabet’s Q1’26 earnings report which revolved around a few key themes: 1) Search & Other demonstrated strong growth (4th consecutive quarter of revenue growth reacceleration) as the company executes well around multi-modality and a rising consumer environment for queries; 2) For YouTube – YouTube Ads segment revenue growth missed our estimates as the overall brand advertising environment remains a headwind but with the Subscriptions Platforms & Devices segment outperforming; 3) Google Cloud with +63% YoY revenue growth, a nearly doubling of the revenue backlog QoQ and with ~57% incremental segment margins as the company full stack approach to scaling both AI and non-AI workloads is increasing in its operating momentum; 4) balance continued to be demonstrated around capital allocation including reinvestments against growth opportunities vs. leverage on expenses (with EBIT margins showing strong beats) and shareholder returns (a raising of the dividend but with no stock buybacks in the quarter).

While management’s comments about capex continue to emphasize an upward trajectory (which we again reflect in raised capex estimates), investors are increasingly focusing on backlog size and growth and the scope for sustained revenue growth in the Cloud segment as a means of measuring return profile of those capital investments.”

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