New York, January 1, 2026, 16:51 ET
- Citizens raised Alphabet's 12-month price target to $385, suggesting an upside of about 22% from Tuesday's closing price.
- Analysts expect EPS growth to slow to 6% in 2026 as capital spending increases. Revenue growth is still expected to be in the mid-teens.
- Google Cloud backlog and AI infrastructure costs shape the bull/bear debate for 2026.
Citizen Financial Group analyst Andrew Boone raised his 12-month price target on Alphabet (an estimate of how likely the stock is to trade) to $385, suggesting an upside of about 22% from Tuesday's closing price. “We believe AI search will be a near-term tailwind for query growth,” Boone wrote in a research note. TD Cowen's John Blackledge and Evercore ISI's Mark Mahaney also have bullish ratings, with price targets of $350 and $325, respectively, according to Barron's. Barons
After Alphabet gained about 65% in 2025, new calls landed heading into 2026, which is the main driver for the S&P 500's communications services sector. U.S. stocks ended the year near all-time highs, with investors resetting positions with limited new price signals as markets are closed on Thursday for the New Year's Day holiday. Reuters
Analysts expect Alphabet's common earnings measure, earnings per share, to rise just 6% to $11.24 in 2026, lower than the estimated 32% increase in 2025, Investors Business Daily reported. It expects revenue to rise about 14% to $454.8 billion, while capital spending (mainly money going toward data centers and hardware) will rise nearly 29% to $114.3 billion. Google Cloud's $155 billion backlog, or contracted work that hasn't yet been recorded as revenue, puts its business execution at the center of discussions in 2026. investor
Boone's memo focuses on AI Mode and AI Overview, a feature that generates answers at the top of Google's results pages, as a way to increase engagement. Alphabet has been introducing AI to search while trying to protect advertising prices as rivals build new “answer engine” products.
Alphabet Bear's concern is that AI-generated answers could reduce clicks on traditional links and disrupt how ads are displayed and priced. Bulls argue the opposite. Better answers mean people stay on Google and ask more questions.
The debate has intensified as Alphabet spends millions building a computing backbone for generative AI. Investors are watching to see whether the growing demand for AI capabilities will lead to sustained revenue growth, rather than just increased costs.
Another pressure point is the cloud. Google Cloud is still smaller than Microsoft's Azure and Amazon Web Services, but it is increasing its focus on AI infrastructure (rented computing power that companies use to train and run AI models).
Some investors also monitor year-end insider activity. John Kent Walker, Alphabet's president of global affairs and chief legal officer, sold the Class C stock on Dec. 30 under a Rule 10b5-1 plan, a pre-arranged program for companies to automate trading, according to a Form 4 filing. SEC
Alphabet Class A shares (GOOGL.O) were last trading at around $313, close to the level used to calculate Mr. Boone's upgrade. The company's market capitalization is nearly $2.94 trillion, according to market data.
For large technology companies, the broader market context is important. After three consecutive years of double-digit gains in major U.S. benchmarks, some investors are questioning how much AI themes are already priced into mega-cap stocks.
For Alphabet, the scorecard for 2026 is clear. This is proof that AI capabilities can increase query volume and ad demand, turning cloud backlog into revenue without hurting margins. Missing either could test the market's willingness to buy up the stock.
With U.S. trading set to resume after the holidays, Alphabet will be an early barometer of how long Wall Street's 2026 optimism lasts and how much the market is already supporting that optimism.
