Barclays Hikes Alphabet Price Target to $425

Barclays analyst Ross Sandler raised the price target on Alphabet (NASDAQ: GOOGL) to $425 (from $405) while maintaining an Overweight rating.

“GOOGL reported a 2% beat on revenue and 1% on OI vs. consensus, and per usual the call was upbeat.

Alphabet is the most AI forward company in the world right now, with fully scaled business units across the application layer (Search, Gemini, etc.), the model layer (Gemini, Flash, etc.), the infrastructure layer (GCP), and the raw compute layer (TPU).

No one in the space is really comparable, and this breadth will be increasingly on display in subsequent quarters as Cloud continues to accelerate further.

At the same time, management sounded confident around Gemini 4 and the overall cadence of AI model development going forward.

However, the cost of competing with Anthropic and OpenAI at the model layer, AWS and Azure at the infrastructure layer and keeping the lights on for 13 apps with north of 1B users is starting to show signs of stress.

Renting external GPU capacity at above market rates for GCP customers (likely in an effort to open up 1P training capacity for DeepMind) is a bit of a headscratcher, which we chalk up to the cost of competing with all these irons in the fire at Alphabet.

We trim FCF on the higher capex. Our EPS comes down for 4Q/1Q27 on the Colossus agreement, but goes up outside of that temporary hit.

Looking ahead, Search is likely to decelerate in 2H which may keep shares somewhat range-bound near term, but longer-term there are few better positioned names to capture AI upside across the stack.”

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