NEW YORK, January 1, 2026, 16:51 ET
- Citizens lifted its 12-month price target for Alphabet to $385, implying about 22% upside from Tuesday’s close.
- Analysts see 2026 EPS growth slowing to 6% as capital spending rises; revenue growth is still projected in the mid-teens.
- Google Cloud’s backlog and AI infrastructure costs are shaping the 2026 bull-and-bear debate.
Citizens Financial Group analyst Andrew Boone lifted his 12-month price target — an estimate of where a stock could trade — on Alphabet to $385, implying about 22% upside from Tuesday’s close. “We view AI search as a tailwind near term for query growth,” Boone wrote in a research note. TD Cowen’s John Blackledge and Evercore ISI’s Mark Mahaney also carry bullish ratings, with price targets of $350 and $325, respectively, Barron’s reported. 1
The new calls land as Alphabet heads into 2026 after a roughly 65% jump in 2025, a major driver of the S&P 500’s communication services sector. U.S. stocks finished the year near record highs, and markets are closed on Thursday for the New Year’s Day holiday, leaving investors to reset positions with limited fresh price signals. 2
Analysts expect Alphabet’s earnings per share, a common profit measure, to rise just 6% in 2026 to $11.24, down from estimated 32% growth in 2025, Investors Business Daily reported. They see revenue up about 14% to $454.8 billion, while capital spending — money devoted mainly to data centers and hardware — increases nearly 29% to $114.3 billion. Google Cloud’s $155 billion backlog, or contracted work not yet booked as revenue, has put execution in that business at the center of the 2026 debate. 3
Boone’s note leaned on AI Mode and AI Overviews, features that generate answers at the top of Google results pages, as a lever for higher engagement. Alphabet has been rolling AI into Search while trying to defend ad pricing as rivals build new “answer engine” products.
The concern for Alphabet bears is that AI-generated answers reduce the number of clicks on traditional links, which could disrupt how ads are shown and priced. Bulls argue the opposite: that better answers keep users on Google and expand the number of questions people ask.
That debate has sharpened because Alphabet is spending heavily to build the computing backbone for generative AI. Investors are watching whether higher demand for AI capacity translates into durable revenue gains rather than just higher costs.
Cloud is the other pressure point. Google Cloud remains smaller than Microsoft’s Azure and Amazon Web Services, but it has been pushing harder into AI infrastructure — the rented computing power companies use to train and run AI models.
Some investors are also monitoring insider activity at year-end. A Form 4 filing showed Alphabet’s president of global affairs and chief legal officer, John Kent Walker, sold Class C shares on Dec. 30 under a Rule 10b5-1 plan, a pre-arranged program companies use to automate trades. 4
Alphabet Class A shares (GOOGL.O) were last around $313, leaving the stock close to the level used in Boone’s upgrade math. The company’s market value stood near $2.94 trillion, according to market data.
The broader market backdrop matters for big tech. After three straight years of double-digit gains for the main U.S. benchmarks, some investors are questioning how much more of the AI theme is already priced into mega-caps.
For Alphabet, the 2026 scorecard will be clear: evidence that AI features lift query volumes and advertising demand, and signs that cloud backlog converts into revenue without squeezing margins. Miss either, and the market’s willingness to pay up for the stock may be tested.
With U.S. trading set to resume after the holiday closure, Alphabet will be an early barometer for how durable Wall Street’s 2026 optimism is — and how much of that optimism the market has already banked.
