Wells Fargo Raises Alphabet Price Target to $417

Wells Fargo analyst Ken Gawrelski raised the price target on Alphabet (NASDAQ: GOOGL) to $417 (from $411) while maintaining an Overweight rating.

“See upward Street est revisions from external TPU sales, but questions on appropriate capitalization of profit stream.

Post 3Q, w/ expectation of some mgmt visibility into external TPU sale economics, see Street revs and EPS ests rising. Project ’27 total revs 14% above Street, though EPS in-line.

Est ’28 revs / EPS above Street by 20% / 5%. Believe even those most bullish on TPU contributions agonize over appropriate multiple for profit stream, w/ consensus emerging around NVDA’s mid-teens P/E.

Project 28% / 29% upside to consensus 3Q / 4Q:26 GCP revenues primarily driven by $9.2B / $11.5B of external TPU sales. Forecast core Cloud (ex-TPU sales) revenues accel 8pts to +81% y/y in 3Q.

We project 0.4GW / 0.5GW of external TPU system sales in 3Q / 4Q, in-line w/ Broadcom commentary for 1GW in ’26.

Market anticipating further TPU commentary from management. We project GCP 15% markup on TPU COGS and gross accounting. We expand on expectations for TPU accounting detail in accompanying note.

Search engagement remains robust w/ global sessions +36% y/y, steady Q/Q, but emerging concerns around consumer agent competition w/ commercial search use case.

Project solid though decelerating search revs at +14.5% y/y w/ tougher 4Q comp likely driving further decel (+12.4%).

While decel independent of agentic competition fears, see consumer agent use case as a substitute, not a complement, to commercial search.

Google must address this emergent use case, either thru Gemini or new offering.

No expected changes to ’26 CapEx but any qualitative ’27 commentary likely points to ($350B) of CapEx, above street ($305B) but in line w/ buyside expectations.

Any suggested upside to buyside range in ’27 would elicit caution, in our view. Google surprised market w/ equity raise in early June and expect company to remain an active debt issuer (NTM est $45B).

Company remains very well capitalized, but see hyperscaler investors increasingly favoring moderation of rate of change of CapEx growth.

Estimates, rating and price target. ’26 revenue estimates largely unchanged, but increase ’27 by 4% primarily due to a 10% increase in GCP revenues from 1GW of incremental external TPU sales.

Raise ’26 / ’27 total OI forecasts by 1% / 2%, with core services OI increasing by 1% / 1%.

Increase ’27 GCP OI by 5% from addt’l TPU sales. ’26 / ’27 EPS ests increase to $20.66 / $15.17 from $20.55 / $14.94.

Reiterate Overweight rating and raise PT to $417 (prior $411), based on 27.5x (unch) ’27E EPS.”

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