Alphabet (GOOGL 2.46%) (GOOG 2.50%) was a phenomenal performer in 2025, as its shares skyrocketed 65% last year. They are down about 3% in 2026 (as of March 16), but investors might not find it difficult to be optimistic.
Can this top artificial intelligence (AI) stock rise about 15% from the current price of $305 to $350 by year-end? The math says it’s possible.
Image source: The Motley Fool.
Earnings growth has propelled Google
In the past three years, Alphabet’s diluted earnings per share climbed at a compound annual rate of 33.3%. This is an impressive trend. It showcases the strength of the underlying business, as durable revenue growth, particularly in areas like digital advertising and Google Cloud, continues to be a driving force for the bottom line.
For 2026, the consensus view among sell-side analysts is that Alphabet’s diluted EPS will grow by just 7% compared to the year before. That would mark a notable slowdown from the previous year. However, it’s still a positive figure that can be the tailwind the share price needs to increase.
Alphabet plans to spend $175 billion to $185 billion on capital expenditures in 2026, as it focuses on its AI strategy. This will impact profits.
“As we’ve discussed on previous calls, the significant increase in our investments in technical infrastructure will continue to put pressure on the P&L in the form of higher depreciation expense and related data centers’ operations costs such as energy,” CFO Anat Ashkenazi said on the Q4 2025 earnings call.
Today’s Change
(-2.46%) $-7.56
Current Price
$299.57
Key Data Points
Market Cap
$3.7T
Day’s Range
$298.50 – $305.76
52wk Range
$140.53 – $349.00
Volume
1M
Avg Vol
32M
Gross Margin
59.68%
Dividend Yield
0.27%
Market sentiment can play an important role
Alphabet’s stock can also benefit from an expanding valuation multiple. Shares currently trade at a price-to-earnings (P/E) ratio of 28. While this represents a premium to the overall S&P 500 index‘s multiple, it’s easy to argue that Alphabet is totally deserving of this valuation. This is one of the world’s truly elite businesses.
It’s not unreasonable to believe the P/E ratio can even grow to 30 before 2026 comes to a close. The company could end up reporting financial results that surprise to the upside. This can drive improving market sentiment.
Combine the projected 7% diluted EPS growth with a 7% expansion of the P/E multiple, and the necessary tailwinds are in place to support the stock price getting close to $350 by year-end. Based on this math, it’s definitely possible.
But it’s important for investors to realize that buying shares in a business with such a short-term price target in mind is not the best mental framework to adopt. The smartest market participants approach things with a long-term mindset. Only buy Alphabet if you intend to hold for at least the next five years.
