Alphabet will surge 40% as Google becomes an AI leader, Wells Fargo says

Alphabet has room to run due to Google being well positioned to emerge as a frontrunner in the artificial intelligence race, according to Wells Fargo. The bank raised its price target on Alphabet to $397 from $387, implying 41% upside from Thursday’s close. It maintained an overweight rating on the tech giant. “GOOGL has all the pieces necessary to be an AI winner, with an industry-leading capacity position to support internal efforts (Search, Gemini) and monetize externally through GCP, broad distribution network, and vast consumer data,” analyst Ken Gawrelski said Thursday in a note to clients. “We’re more comfortable with Google’s competitive position in search, given progress with AI mode and Gemini adoption, and overall see AI as TAM expanding.” GOOGL YTD mountain GOOGL year to date Google has made several moves to become a bigger player in the AI industry, competing with other Silicon Valley heavyweights such as Meta and Amazon.com . Last fall, Google struck a deal with Anthropic to grant the AI company access to up to one million of its custom-designed Tensor Processing Units, or TPUs. The agreement is expected to bring more than a gigawatt of AI compute capacity online this year. The company also completed earlier this month its $32 billion acquisition of cloud security firm Wiz. The deal aims to bolster the security of Google Cloud Platform, including its multicloud and AI features. “Google [is] leveraging its compute capacity advantage to develop new profit pools,” Gawrelski wrote, adding that he expects GCP and operational intelligence revenue to increase 4% and 6%, respectively, in 2026. Wells Fargo also expects revenues from those businesses to jump 7% and 14%, respectively, in 2027. The analyst added that Google’s Broadcom TPU sales to Anthropic are expected to result in $2.5 billion and $7.5 billion “incremental, high-margin (85%) Google Cloud revenue” in 2026 and 2027, respectively, given the firm’s IP licensing fee of $2,500 per TPU. Wells Fargo’s call falls in line with consensus on the Street. Of the 60 analysts covering Alphabet, 53 have a buy or strong buy on shares. Alphabet has fallen 10% since the beginning of the year amid a double-digit decline among all the “Magnificent Seven” stocks.