Google Faces $450 Test as AI Rally Meets EU Risk

New York, May 26, 2026, 08:02 EDT

Alphabet’s AI-fueled rally is on watch ahead of the U.S. open. Investors are looking at higher price targets but also bracing for a potential big EU fine tied to Google’s search business.

Google can show AI demand, that’s clear. The real test now is whether it can turn that demand into lasting profits, given big spend on data centers and ongoing battles with regulators in its top markets.

Alphabet Class A (GOOGL) finished the last session at $382.97, slipping 1.21%. In pre-market trading, MarketScreener quoted the stock at $383.47, a 0.13% uptick as of 8:02 a.m. EDT. The site’s consensus page showed 64 analysts covering the name, averaging a “buy” call and a $429.12 price target. That’s about 12% above the last close. MarketScreener

Wells Fargo’s Ken Gawrelski lifted his price target on Alphabet to $435 from $427, sticking with his overweight call, TheStreet said. Gawrelski’s move follows Google’s I/O conference and quarterly results that gave bulls more support for the idea that AI-driven cloud demand is starting to show up in revenue.

UBS held back. Analyst Stephen Ju stayed at neutral on Alphabet and kept his $410 target, MarketScreener reported. That target is still ahead of the latest close but trails a string of bullish price calls lately.

Needham analyst Laura Martin put a $450 price target on GOOGL on May 20, according to Quiver Quantitative. Over the past six months, 33 analysts gave targets on the stock, Quiver said, with the median at $415. Mizuho recently set a $460 target, while Citizens went higher at $515.

Alphabet bulls got a strong quarter to work with. Revenue for the first quarter climbed 22% to $109.9 billion. Google Cloud sales surged 63% to $20.0 billion. Diluted EPS came in at $5.11, up 82%. CEO Sundar Pichai credited gains to “AI investments and full stack approach.” Alphabet reported its cloud backlog—revenue under contract but not yet recognized—almost doubled, now at over $460 billion. Securities and Exchange Commission

Google leaned on I/O to push its AI push. The company dropped AI agents into Search, rolled out Gemini 3.5 Flash aimed at coding and automation, and claimed 900 million monthly Gemini users. “When people use our AI-powered features in Search, they use Search more,” Pichai said. Reuters

Google is up against rivals in AI. Reuters said the company is working to slow enterprise gains from OpenAI and Anthropic, even as it brings Gemini deeper into its core platforms like Search, YouTube, Gmail and Chrome. At I/O, CEO Sundar Pichai said AI Overviews in Search now get 2.5 billion monthly users, with AI Mode at 1 billion.

Alphabet still has to show it can spend wisely. The company is set to spend $180 billion to $190 billion on capex this year, Reuters said. The money targets data centers, chips, and AI infrastructure. The bet is on cloud deals and AI subscriptions continuing to grow. That payoff gets weaker if demand slips or if prices drop faster than usage climbs.

Regulation could move markets too. The EU is looking to hit Google with a high triple-digit million euro fine on worries it gives preference to its own products in search, according to Reuters, which referenced Germany’s Handelsblatt. The action is under the Digital Markets Act, the bloc’s rulebook targeting big tech.

European Commission spokesperson Thomas Regnier said the EU’s focus is on getting companies to comply rather than punishing them, but said the bloc would “not hesitate to move to the next steps.” Google said its DMA changes have been the “biggest downgrade” ever for Search and have hurt European users. Reuters

Alphabet sits in a spot Wall Street knows. The Street is giving a nod to better cloud growth and wider Gemini rollout, but UBS still rates the shares neutral, with some not ready to pay more after the stock’s climb. Where the stock goes next could hinge less on another AI showing and more on how well Google keeps turning backlog into revenue, while not letting capex, pricing, or antitrust issues pressure margins.

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