Analysts see 40% upside for Google’s parent despite YTD dip
Alphabet (GOOGL), the parent company of Google, remains one of the most dominant players in tech with a market cap of $2.17 trillion. Despite a 6.3% decline in stock price year to date—underperforming the Nasdaq’s 5.3% gain—analysts remain bullish on the stock’s long-term potential. Strong fundamentals, multi-segment growth, and aggressive AI investments have positioned Alphabet as a top-tier growth opportunity.
A diversified growth engine with AI at the core
Alphabet’s business spans several high-growth verticals. Google Search continues to be its primary revenue generator, enhanced by AI Overviews now reaching 1.5 billion users monthly across 140 countries. YouTube remains a digital juggernaut, with Shorts showing a 20% YoY engagement increase and YouTube Premium attracting over 125 million paying subscribers. Monetization through ads and creator partnerships continues to climb.
Meanwhile, Google Cloud posted Q1 revenues of $12.3 billion—a 28% YoY gain. Operating margins nearly doubled to 17.8%, with income rising to $2.2 billion. Alphabet’s $75 billion in planned 2025 capex, primarily for AI infrastructure, reflects long-term confidence. The recent acquisition of Wiz underlines its focus on cybersecurity in a multi-cloud world.
In Q1 alone, Alphabet generated $90.2 billion in revenue (up 12% YoY), $2.81 EPS (up 49%), and $19 billion in free cash flow. The company ended the quarter with $95.6 billion in liquidity and returned $17.5 billion to shareholders via dividends and buybacks. It also authorized a new $70 billion repurchase program.
Ambitious bets and AI leadership
Alphabet’s “Other Bets,” including Waymo and Verily, remain long-term plays, contributing $450 million in revenue but posting a $1.2 billion operating loss. Still, Waymo’s partnerships with Uber and Moove show traction. CEO Sundar Pichai remains focused on AI integration, with the Gemini platform reaching 35 million daily active users and powering Search for 1.5 billion people worldwide.
Despite competition from Microsoft, Meta, and Amazon in the AI space, Alphabet’s financial strength and infrastructure investments provide a strong moat. With a forward P/E of 18, GOOGL is still attractively valued for a company leading in cloud, AI, and digital advertising.
Wall Street verdict: Strong Buy with 40% upside
According to 53 analysts, GOOGL stock earns a consensus “Strong Buy” rating. Of these, 41 recommend a Strong Buy, 4 a Moderate Buy, and 8 a Hold. The average target price of $200.74 represents a 13% upside from current levels. The high-end estimate of $250 implies a 40.7% gain in the next 12 months.
