Alphabet Inc.’s (GOOG) Generative AI Capex to Drive Up to $23B in Cloud Revenue, Says UBS

Alphabet Inc. (NASDAQ:GOOG) is among the 8 Most Promising Metaverse Stocks to Buy According to Hedge Funds.

Alphabet Inc. (NASDAQ:GOOG) is one of the most promising stocks.

On February 5, UBS increased its price target on Alphabet Inc. (NASDAQ:GOOG) to $348 from $345 while maintaining a Neutral rating on the stock. The firm pointed out that a higher-than-expected return on invested capital is a result of Google’s capital expenditures connected to generative AI. Over the 2026–2027 timeframe, these expenditures are expected to generate between $19 billion and $23 billion in cloud income and an additional $5 billion to $6 billion in advertising revenue.

Nevertheless, UBS also pointed out that increased capital expenditure is hurting overall profitability, with the anticipated gain in earnings per share in 2027 being only about 1%. The company feels that a neutral posture is still warranted because the shares are trading close to peak valuation multiples.

Additionally, it was reported on February 18 that Alphabet Inc. (NASDAQ:GOOG) announced a $15 billion plan to boost AI development in India, focusing on expanding digital infrastructure and connectivity. The project includes a new subsea gateway in Visakhapatnam and three additional routes linking India to Singapore, South Africa, and Australia, enhancing network redundancy and reliability.

GOOG is also partnering with India’s Karmayogi Bharat mission via the iGOT Karmayogi platform to digitize legacy training and expand AI-enabled learning for over 20 million public servants across 800 districts in more than 18 languages, strengthening public sector capabilities nationwide.

Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, focusing on search, AI, cloud, and emerging technologies. From a metaverse perspective, Alphabet invests in AR/VR, AI, and immersive platforms, enabling scalable virtual worlds, interactive experiences, and next-generation digital ecosystems that connect users globally.

While we acknowledge the potential of GOOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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