Investing.com — Alphabet shares have moved from doubt to leadership in the artificial intelligence race, according to Morgan Stanley, which raised its price target on the stock from $210 to $270, with a $335 bull case.
The bank said Alphabet’s investor narrative had shifted dramatically over the past six months.
“GOOGL investor tone and discussions have quickly shifted as pace of innovation has accelerated, the DoJ remedy was even more benign than we (as bulls) thought, and there is growing positive GenAI adoption signal across multiple GOOGL business lines,” analysts wrote.
Morgan Stanley highlighted that Alphabet’s valuation has re-rated significantly. “GOOGL’s P/E (on ‘26) has risen ~45% since April’s spring troughs…now at ~22X, a ~10% premium to GOOGL’s 5-year NTM average multiple,” the note said.
The firm added: “GOOGL has become an ‘AI Winner’ which we think is right, but we are also accountable to multiples vs. growth and history.”
From here, the bank said, earnings revisions will be critical. “From here we are focused on upward revisions, specifically in Search and GCP,” it wrote, pointing to faster search and cloud growth from generative AI.
Morgan Stanley now models search revenue growth of 10% in 2026 and 8% in 2027, up from prior estimates.
The analysts noted that “Gemini app downloads are trending well,” but placed more weight on Alphabet’s broader innovation pipeline.
“We are more encouraged by GOOGL’s expanding GenAI-enabled capabilities across its leading user bases and data (like Chrome most recently).”
The report concluded that every percentage point of incremental search growth could drive further upside to price targets.
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