UBS Reiterates Neutral Rating on Alphabet, $410 Price Target
UBS analyst Stephen Ju reiterated a Neutral rating and $410.00 price target on Alphabet (NASDAQ: GOOGL).
“The top debates on Google right now are around the cloud backlog to revenue drawdown rate and the impact of chip sales and larger AI lab deals on margins.
To address these questions we refine our Google Cloud buildout methodology today where we split the Performance Obligation (backlog) into its constituent pieces – these include the “Core” non-AI piece, Vertex, as well as the recent large contracts signed with Anthropic, OpenAI and Meta.
Our updated process drives our Google Cloud revenue up ~24% and ~34% for 2026 and 2027, respectively, as some of the backlog conversion into revenue – particularly the TPU sales – is pulled forward from 2028.
This alteration results in our comparable period gross revenues moving up by ~5% and ~10%.
On the other hand, our Google EPS estimates for 2026 and 2027 decrease ~1% and ~7% respectively as we account for lower margins on chip sales as well as pare back margins on non-Vertex backlog conversion.
Our 2026 / 2027 revenue estimates are now ~7% / ~16% above Street’s, respectively, but our EPS estimates are in line and only 1% ahead. Our price target remains at $410 and we keep our Neutral rating.”
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