This article first appeared on GuruFocus.
Alphabet (NASDAQ:GOOGL), Google’s parent and a major advertising and cloud-computing company, edged less than 0.1% lower in Wednesday’s regular-session trading despite a fresh upgrade from Phillip Securities. Analyst Serena Lim Yi Qi raised the rating to buy from accumulate following Alphabet’s post-earnings decline. She simultaneously reduced the price target to $425 from $450.
The analyst cited Alphabet’s vertically integrated AI system, which combines proprietary Tensor Processing Units, data centers, Gemini models, Search and Google Cloud. Cloud revenue increased 82% from one year earlier, while advertising revenue rose 14%. However, Alphabet raised its 2026 capital-expenditure guidance to between $195 billion and $205 billion and reported negative quarterly free cash flow for the first time in its history. Phillip Securities consequently lowered its fiscal 2026 revenue forecast by approximately 2% and its net-income estimate by 4%.
Other analysts remain divided. Barclays maintained an overweight rating and $425 target, while Citizens retained a market outperform rating with a $515 objective. Bernstein SocGen maintained market perform and reduced its target to $385, citing negative free cash flow and the spending increase. From Alphabet’s Wednesday price of approximately $333.56, Phillip Securities’ $425 target represents potential appreciation of roughly 27%. The $130 difference between the highest and lowest cited targets demonstrates the scale of disagreement surrounding AI returns. Investors may continue weighing accelerating cloud demand against the cash-flow pressure created by Alphabet’s infrastructure program.
