Susquehanna Lowers Alphabet Price Target to $400

Susquehanna analyst Shyam Patil lowered the price target on Alphabet (NASDAQ: GOOGL) to $400 (from $460) while maintaining a Positive rating.

“AI investment to continue, TPU sales ramping. GOOGL doesn’t guide, but management provided some high-level commentary on the outlook.

Management noted that FX could serve as a slightly larger headwind to revenue in 4Q than it did in 3Q, again particularly impacting Search and YouTube.

For Search, GOOGL indicated that revenue growth pressure will persist as the segment continues to lap the performance acceleration that began in 3Q25.

The company expects to continue recognizing TPU system sales agreements this year but for sales to ramp more significantly in 2027.

Management also expects its usage of third-party compute capacity to ramp in 4Q as it builds out its own capacity, allowing the company to continue growing its customer base, though it could lead to modest margin pressure over the near term.

GOOGL is leaving its FY26 capex guidance range unchanged at $195b-$205b and reiterated that capex is expected to increase significantly in FY27, with more details to come on the next call.

In terms of expenses, the company expects its focus on AI to continue pressuring margins due to depreciation growth, as well as increased energy costs, AI-related headcount expenses, and AI-related marketing expenses.

Lastly, management emphasized that it expects to generate an attractive ROIC that meaningfully outpaces its cost of capital throughout this investment cycle.

Adjusting estimates and lowering our price target to $400 (from $460).

Based on the results and management’s commentary, we are raising our 2026 net revenue estimate by 2%, leaving GAAP EBIT broadly unchanged, and lowering GAAP EPS by 4%.

We are raising our 2027 revenue estimate by 7%, GAAP EBIT by 3%, and GAAP EPS by 2%. We are lowering our price target to $400 (from $460) based on our SOTP.”

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