Wolfe Research Reiterates Outperform on Alphabet, $460 PT

Wolfe Research analyst Shweta Khajuria reiterated an Outperform rating and $460 price target on Alphabet (NASDAQ: GOOGL).

“Q2 was a clean print – a beat across the board with ongoing share gains in Cloud (ATH Q/Q GCP revenue increase), beginning of TPU monetization, healthy Search growth, and accelerating YouTube growth.

That said there is some concern around rising CapEx and modest operating margin pressure in H2:26.

We are rasing our CapEx est. post Q/Q backlog increase: Mgmt. raised ’26 CapEx guide (to $195B-$205B from $180B-$190B) and we are raising our ’27 CapEx estimates by $25B to $330B to account for potentially 750 MW of incremental capacity implied by Q2 backlog increase ($50B+ Q/Q backlog increase, assuming $40B in Cloud backlog ex-TPU sales, monetized over 2 years, implies 750MW per year).

We also assume $1.0-$1.5B in TPU sales revenue in Q2 implying 50 – 75 MW of TPU capacity made available in Q2.

For 2026, that would imply ~150 – 250 MW of TPU capacity in 2026 (or $3-$5B in TPU revenue). Google expects to realize vast majority of TPU sales beginning in 2027.

We estimate $100B+ in TPU sales within FY26 backlog, and likely 2-3 GW of external TPU capacity made available and 4-5 GW of TPUs for internal usage in 2027.”

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