MOUNTAIN VIEW, California, May 18, 2026, 07:03 (PDT)
Bank of America is sticking with its Buy on Alphabet and holds its $430 target, with the focus turning to Tuesday’s Google I/O. Analyst Justin Post thinks the developer event will bring a raft of AI updates—Gemini tweaks, tighter integration, new agent features. He said the stock may need some “AI surprises” for further multiple expansion. TipRanks
Alphabet’s Class A shares traded up 1.3% at $401.87 during early Nasdaq action Monday. Class C shares added 1.2% to $398.20. The move put the company’s market value close to $4.9 trillion as investors watched for signs that spending on AI is driving revenue, not just costs.
This is why it’s in focus now. Google I/O kicks off Tuesday at 10 a.m. Pacific with a keynote. The company’s developer event is set to center on Search, Android, Gemini, and smart glasses—no formal financial updates on the agenda. It takes place at Shoreline Amphitheatre in Mountain View, with Google streaming sessions and keynotes online on May 19-20.
Alphabet starts the week showing better numbers than last year. First-quarter revenue climbed 22% to $109.9 billion, a filing showed. Google Cloud revenue was up 63% to $20.0 billion. CEO Sundar Pichai credited AI bets and a “full stack approach,” saying they were “lighting up every part of the business.” SEC
The key issue is whether the demos are good enough for the stock. Post’s team said expectations are elevated, and if there’s no “wow” factor, shares could take a hit. They flagged risks: lost search traffic to competing AI products, delays in rolling out large language models to search, pressure from the EU Digital Markets Act, and growing capital spending that could drag on free cash flow. TheStreet
Agentic AI looks set to be in focus, meaning products that act for users instead of only replying to prompts. According to Post, this could trigger new questions about direct traffic for travel, e-commerce, and delivery sites, but he still thinks broad use is years out, not quarters. Booking and Expedia may show up as travel partners, but Amazon probably won’t be an early e-commerce partner.
William Blair’s Ralph Schackart kept a Buy on Alphabet Class C, pointing to Google’s vertically integrated AI from research through apps and strong ROIC. Scotiabank is also staying at Buy with a $450 target, according to TipRanks.
Google Cloud is still trailing Amazon Web Services and Microsoft Azure, but saw 63% growth last quarter, outpacing both rivals’ most recent cloud numbers, Reuters reported. Google also started selling its Tensor Processing Units—custom AI chips designed to take on Nvidia’s graphics processors—as it pushes to sell more of its internal tech to outside buyers.
Alphabet upped its 2026 capital spending plans to between $180 billion and $190 billion, Reuters said, citing CFO Anat Ashkenazi. Ashkenazi also said there’s another big rise coming in 2027. Thomas Monteiro at Investing.com said it’s “well within the company’s spending power” after faster growth in cloud. Reuters
Sentiment is in focus, too. Bill Ackman said on Saturday that Pershing Square’s exit from Alphabet wasn’t a bearish move. He wrote the fund is “very bullish long term,” but needed to tap Google shares to raise cash for its position in Microsoft. Reuters
Tuesday’s focus is clear. Investors are looking for practical AI tools in Search and Android, proof that Gemini benefits Cloud and subscriptions, and reassurance that Alphabet’s big data-center and chip investments won’t hit margins hard. Bank of America’s $430 price target leaves Google some upside, but little space to disappoint.
