Alphabet shares declined 1.5% amid broader market weakness. U.S. stocks slumped after President Donald Trump ramped up tariffs, with investors continuing to sell companies perceived as potential AI losers. However, Wells Fargo analyst Ken Gawrelski upgraded Alphabet to overweight from equal weight on February 23, raising his price target from $354 to $387, citing three key traits positioning the company as an AI winner: data, distribution, and computing capacity. Gawrelski noted Alphabet plans to expand AI compute capacity to 35 gigawatts by 2028 from 15 gigawatts at year-end 2024, and projects Gemini average recurring revenue will triple to $12 billion by end of 2027 from $4 billion. Additionally, Google announced new data center projects in Minnesota and Texas with renewable energy partnerships. Of 61 analysts covering Alphabet, 52 rate it a buy or strong buy.
Read full analysisAlphabet shares declined 1.5% amid broader market weakness. U.S. stocks slumped after President Donald Trump ramped up tariffs, with investors continuing to sell companies perceived as potential AI losers. However, Wells Fargo analyst Ken Gawrelski upgraded Alphabet to overweight from equal weight on February 23, raising his price target from $354 to $387, citing three key traits positioning the company as an AI winner: data, distribution, and computing capacity. Gawrelski noted Alphabet plans to expand AI compute capacity to 35 gigawatts by 2028 from 15 gigawatts at year-end 2024, and projects Gemini average recurring revenue will triple to $12 billion by end of 2027 from $4 billion. Additionally, Google announced new data center projects in Minnesota and Texas with renewable energy partnerships. Of 61 analysts covering Alphabet, 52 rate it a buy or strong buy.
Alphabet is the parent company of Google, the world's dominant search engine, as well as YouTube, Google Cloud, and autonomous driving unit Waymo. The company is in the midst of a massive AI infrastructure buildout, having guided for up to $185 billion in 2026 capital expenditure — a figure that triggered a roughly 10% selloff through mid-February before a sharp rebound on the Supreme Court tariff ruling. New data center agreements announced Tuesday in Minnesota and Texas underscore the scale of that buildout as investors weigh whether the spending will generate adequate returns.