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Alphabet (GOOGL) Stock Skyrockets on AI & Ad Revival – Could $300 Be Next?

by
16 October 2025
  • Current price & trend: GOOGL traded near $255–$256 on Oct. 16, up about 2% from the prior close and close to 52-week highs [1]. This puts Alphabet’s market value near $3 trillion (just shy of the elite $3T club) [2], after a ~30%+ gain YTD and a blistering +38% surge in Q3 alone [3].
  • Analyst upgrades: Wall Street has turned sharply bullish. Scotiabank just raised its price target to $310 (from $240), praising a “clear recovery” in Google’s core ad business and double-digit ad growth [4]. BMO Capital lifted its target to $294 on Alphabet’s “AI leadership” in Search and Cloud [5], while UBS recently nudged its target to $255 (from $237) on improving ad trends [6]. In fact, TipRanks reports a “Strong Buy” consensus (30 Buys vs. 8 Holds) with an average target of ~$259 [7]. (By contrast, MarketBeat notes 35 analysts’ consensus target around $244.68 [8].)
  • AI investments and cloud growth: Alphabet is aggressively spending on AI. TS2.tech notes roughly $24 billion in new AI infra commitments – including $15B for a new India data center and $9B for U.S. expansions [9]. The company has also rolled out AI-driven products (like the Pixel 10 phone) and unveiled advanced AI models (e.g. a 27B-parameter scientific research model) [10]. These bets are boosting its Google Cloud unit: Q2 Cloud revenue hit $13.6B (up 32% YoY) [11], outpacing AWS and roughly matching Microsoft Azure’s torrid 39% growth [12]. Cloud profitability is also improving (operating margin ~20.7% in Q2 [13]), as Alphabet’s custom TPU AI chips (e.g. the new 3nm “Ironwood” TPU) show “significant improvements” that narrow the gap with Nvidia [14].
  • Advertising recovery: Google’s ad businesses are reviving. Google Search revenue grew ~11.7% in Q2 to $54.2B [15], and YouTube ad sales have surged too. In Q2 YouTube ad revenue was $9.8B (up 13% YoY) [16], beating analysts’ forecasts and helping drive total Q2 revenue of $96.4B (+13%) [17]. This reflects broader trends: the rollout of AI-based “Search Overviews” and Gemini features has kept search ads strong [18]. Analysts expect these gains to continue into Q3 and beyond; consensus forecasts call for ~16% revenue growth and ~27% EPS growth for 2025 [19], driven by double-digit ad and cloud sales.

Analysts Turn Bullish on Alphabet

Wall Street’s technical indicators and fundamentals have brightened. As one analyst noted, “Alphabet’s stock flirts with record highs” – shares closed around $245 on Oct. 14, near an all-time high [20]. Most brokerages now rate GOOGL a Buy. TS2.tech reports BMO Capital Markets citing Alphabet’s “AI leadership” in justifying its $294 target [21]. Scotiabank similarly pointed to a “clear recovery” in advertising when boosting its target to $310 [22]. Even Morgan Stanley, UBS and other firms (not cited here) have raised targets modestly, noting that improving ad spending and AI gains warrant higher valuations. MarketBeat summarizes 35 analysts as a “Moderate Buy,” but notes the range of targets is wide (from a low ~$171 to a high $310) [23]. TipRanks’ data is more uniformly positive: 38 analysts on its platform average a $258.81 target [24]. In short, the consensus is bullish, though targets vary with some caution on valuation.

AI & Cloud Spark New Growth Drivers

Alphabet’s recent announcements underscore why investors are excited. The company is plowing tens of billions into AI data centers and chips. Just in the past week Alphabet unveiled a $15B AI data center project in India and a $9B U.S. data center expansion [25]. It also upgraded its AI tools – for example, Google announced Veo 3.1 (an AI video creation tool) and a 27B-parameter “Gemma” model for scientific research [26]. These efforts are already paying off. Google’s cloud division grew 32% in Q2 [27] (the fastest growth among the big three cloud players), helped by enterprise demand for AI-compute. Alphabet’s own Tensor Processing Units (TPUs) now rival Nvidia’s GPUs in efficiency: Scotiabank noted the new 3nm TPU is “significantly” more powerful, helping “narrow the efficiency gap” [28]. In other words, Alphabet’s AI spending is turning into revenue growth, reinforcing its competitive moat against rivals.

Advertising Revival (and Competition)

After a mid-2024 slowdown, Google’s ad business is strengthening. Search ads are rebounding as Google integrates AI chat features into results: search revenue growth accelerated from 9.7% (Q1) to 11.7% in Q2 [29]. YouTube, despite a recent outage, is also booming – Q2 ad revenue hit $9.8B (+13%) [30]. (Even so, usage metrics show a slight drag: Citizens Financial analyst Andrew Boone notes YouTube watch-time fell 1.2% YoY, likely due to rising competition from TikTok and Instagram [31].) Overall, Alphabet’s core ad sales should see double-digit gains if global ad spending holds up. Indeed, Wall Street expects continued strength in ads and Cloud in Q3 (earnings due Oct. 29) [32]. For perspective on competition: Google Cloud’s 32% growth topped AWS (17.5%) but trailed Microsoft Azure (39%) [33], while Google’s new AI search features pit it against Microsoft Bing/OpenAI and Meta’s ad platforms. Alphabet still dominates many markets, but it faces stiff competition on multiple fronts – from TikTok in video ads to Amazon in cloud to Apple in consumer AI assistants.

Regulatory & Valuation Risks

Investors are weighing these gains against ongoing scrutiny. In the EU, Google is fighting an antitrust probe under the Digital Markets Act – Reuters reports Google has proposed new search-result “boxes” to appease regulators and avoid hefty fines [34]. In the UK, the Competition & Markets Authority has slapped Google with “strategic market status,” flagging concerns over search fairness and high ad costs [35]. A major U.S. case is also underway (over Google’s ad-tech practices), and Washington lawmakers remain vigilant. Even non-regulatory issues could bite: many strategists now worry about tech stock valuations. As Reuters notes, the S&P 500 trades at ~23x forward earnings (well above its long-term average) and some see the Magnificent 7’s rally as “frothy” [36]. Ameriprise strategist Anthony Saglimbene cautions that “investors are starting to get a little more concerned about the money that’s being spent [on AI], and the payback for that investment” [37]. In short, heavy AI capex and premium valuations mean Alphabet must keep delivering on growth or face a pullback.

Outlook: Watching the Q3 Report

In the near term, all eyes are on Alphabet’s Q3 earnings (report date Oct. 29). Analysts are looking for another quarter of double-digit revenue growth, as the strong trends in search ads and cloud continue [38]. If Alphabet meets or beats those forecasts, the stock could break out further – many bulls still see upside toward the high-$200s (some price targets even exceed $300). But if results disappoint or guidance is weak, the stock could give back its gains, especially given the regulatory overhang and market volatility. For now, the combination of surging AI investments, recovering ad sales, and broad tech optimism has sent GOOGL shares skyrocketing, but cautious analysts still warn that “big bets” mean big risk if the payoffs don’t come as planned [39].

Sources: Recent market and news analysis from Reuters, TS2.tech, Investing.com, MarketBeat, TechCrunch and other finance media [40] [41] [42] [43]. (All data as of Oct. 16, 2025.)

Alphabet has one of the best LLMs out there in Gemini, says Evercore ISI's Mark Mahaney
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References

1. za.investing.com, 2. ts2.tech, 3. ts2.tech, 4. za.investing.com, 5. ts2.tech, 6. ts2.tech, 7. www.tipranks.com, 8. www.marketbeat.com, 9. ts2.tech, 10. za.investing.com, 11. www.revolgy.com, 12. www.revolgy.com, 13. www.revolgy.com, 14. za.investing.com, 15. www.nasdaq.com, 16. techcrunch.com, 17. techcrunch.com, 18. www.nasdaq.com, 19. ts2.tech, 20. ts2.tech, 21. ts2.tech, 22. za.investing.com, 23. www.marketbeat.com, 24. www.tipranks.com, 25. ts2.tech, 26. za.investing.com, 27. www.revolgy.com, 28. za.investing.com, 29. www.nasdaq.com, 30. techcrunch.com, 31. www.tipranks.com, 32. ts2.tech, 33. www.revolgy.com, 34. www.reuters.com, 35. www.bloomberg.com, 36. www.reuters.com, 37. www.reuters.com, 38. ts2.tech, 39. www.reuters.com, 40. za.investing.com, 41. ts2.tech, 42. techcrunch.com, 43. www.reuters.com

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Marcin Frąckiewicz Latest posts

CEO of TS2 Space and founder of TS2.tech. Expert in satellites, telecommunications, and emerging technologies, covering trends in space, AI, and connectivity.

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