Raymond James Loves AI Overviews. Why That Makes Google Stock a Strong Buy Here.

Artificial intelligence (AI) has been woven into Alphabet’s (GOOG) (GOOGL) DNA for years. It dates back to 2017, when Alphabet began weaving AI into everyday products like Gmail, improving how emails were sorted, filtered, and answered. That early bet reinforced its dominance in Search, which still controls about 90.8% of the market. The payoff has been substantial—revenue climbed from $182 billion in 2020 to a projected $400 billion in fiscal 2025, capped by its first $100 billion in Q3. CEO Sundar Pichai credits a full-stack AI strategy now powering stronger engagement across Search through AI Overviews and AI Mode.

Beyond the headlines, the market is beginning to distinguish between temporary AI enthusiasm and companies positioned for durable growth. Alphabet sits firmly in the latter camp. Its unmatched scale in Search, paired with a rapidly expanding Cloud business, allows it to translate innovation into daily usage and recurring revenue. What once appeared experimental is now showing up in higher engagement, stronger demand, and rising estimates.

That backdrop explains Raymond James’ growing confidence in Alphabet. The brokerage firm believes the tech company is entering a period where improving fundamentals drive consistent revisions higher, rather than a fleeting rebound. As Search evolves and Cloud scales faster than expected, confidence in the long-term story is building.

Raymond James’ analyst recently upgraded the stock to a “Strong Buy,” viewing GOOGL as one of the most compelling large-cap growth opportunities in today’s market.

About Alphabet Stock

Alphabet needs little introduction. What began as a modest search experiment in a Stanford dorm room has grown into a roughly $3.96 trillion technology powerhouse still firmly in expansion mode. Headquartered in California, the company now operates far beyond Google, spanning AI, cloud computing, autonomous mobility through Waymo, and advanced research led by DeepMind.

Its Gemini models further cement Alphabet’s position in next-generation AI architecture. From transforming healthcare to shaping future intelligence systems, Alphabet is adapting to the digital era, and it is actively defining its direction.

Alphabet’s stock price performance has been telling a confident story. A renewed belief in Google’s execution—particularly on AI—has pushed the company’s valuation closer to the $4 trillion mark, placing it comfortably among the most valuable firms on the planet.

In 2025, investors were still questioning whether Google was keeping pace in the AI race. But the narrative has flipped now. GOOGL stock is up about 5.5% over the past month and has emerged as the early leader among the “Magnificent Seven” this year.

Zooming out, the scale of the rally becomes even clearer. The stock recently hit a 52-week high at $340.49 in January and, despite pulling back roughly 3% from that peak, remains firmly in an uptrend. Over the past 52 weeks, Alphabet’s shares rose by about 67%, with the last six months alone delivering gains of nearly 74%.

From a technical standpoint, the chart suggests consolidation, not weakness. After an extended run, GOOGL appears to be pausing. The 14-day RSI has cooled to roughly 61, backing off from overbought territory seen in January. That reset points to a healthier setup, especially as the RSI is starting to trend higher again. Momentum indicators remain steady. The MACD oscillator turned bullish in January, with the MACD line crossing above the signal line and holding in positive territory, another sign that Alphabet’s broader uptrend remains firmly intact.

A Closer Look At Alphabet’s Stellar Q3 Report

The tech giant’s third-quarter results, released on Oct. 29, made one thing clear: the company is still very much commanding its core while quietly building the next engine of growth. Alphabet generated a revenue of $102.3 billion, rising 16% year-over-year (YoY), clearing the Street’s forecast. The bulk of that strength flowed from Google Services, which generated $87.1 billion in revenue, growing 14% annually as Search, YouTube, subscriptions, and platforms continued to monetize global attention at scale.

Search remained the anchor, with the segment’s revenue climbing 14.6% YoY to $56.6 billion, reinforcing Google’s role as the internet’s tollbooth. Advertising revenue followed suit, rising 12.6% to $74.2 billion, a reminder that marketers still prioritize reach, data, and measurable returns—even in a cautious macro backdrop. Yet the standout performer was Google Cloud, with its revenue growing by 34% annually to $15.2 billion, fueled by rising AI workloads and enterprise-led digital transformation, signaling that Cloud is a core pillar.

Profitability was solid across the board. Operating income rose 9% to $31.2 billion, translating to a 30.5% operating margin. Excluding a $3.5 billion European Commission antitrust fine, margins would have landed closer to 34%, highlighting tighter cost control beneath Alphabet’s massive scale. EPS jumped 35.4% to $2.87, beating estimates by a wide margin and underscoring the operating leverage embedded in the model.

Meanwhile, AI is now central, not speculative. Management highlighted its “full-stack AI” approach, with Gemini and other in-house models processing roughly seven billion tokens per minute. The Gemini app has reached 650 million monthly active users, while Google Cloud’s backlog has climbed past $155 billion—future revenue is already spoken for.

Looking ahead, Alphabet is all set to report fourth-quarter and fiscal year 2025 financial results on Wednesday, Feb. 4, after the closing bell. Management projects capital expenditures to be between $91 billion and $93 billion for fiscal 2025, a heavy commitment that underscores how aggressively it is building out AI capacity, data centers, and next-generation computing infrastructure.

Wall Street analysts tracking Alphabet anticipate its Q4 revenue to be around $111.4 billion, with EPS rising 20% YoY to $2.58 for the quarter. For fiscal 2025, EPS is expected to be $10.57, hinting at a 31.5% YoY surge, and then rise by 4.4% annually to $11.03 in fiscal 2026. 

What Do Analysts Expect for GOOGL Stock?

Raymond James has upgraded GOOGL stock to a “Strong Buy” and set a $400 price target, saying the company is entering a period where business momentum is clearly improving. Analyst Josh Beck believes Alphabet’s next leg higher will be driven by steady earnings upgrades rather than a short-term rebound in valuation. His detailed review of Google Search and Google Cloud Platform (GCP) led him to raise forecasts for 2026 and 2027, with his 2027 revenue estimate now running ahead of the broader market.

On the Cloud side, analyst Beck expects growth to remain well above expectations, forecasting 44% growth in 2026 and 36% in 2027. He highlights strong demand for infrastructure and platform services, supported by large deployments of TPUs and GPUs and rising use of the Gemini API and Vertex AI. By the end of 2027, he estimates Cloud could generate about $25 billion annually from TPUs, $20 billion from GPUs, $10 billion from Gemini API, and $2.5 billion from Vertex AI. For Search, Beck sees 13% growth in both 2026 and 2027, as new formats drive more complex queries and better monetization.

Raymond James expects AI-powered searches to lift cost-per-click as richer context improves conversions. AI Overviews are driving longer, more complex queries, unlocking fresh monetization. That momentum underpins its valuation, with the new target based on a 29x 2027 earnings multiple, justified by accelerating AI-led growth across Search and Cloud.

Analysts monitoring GOOGL are bullish, with consensus leaning heavily toward a “Strong Buy.” Out of 55 analysts, 46 advise a “Strong Buy,” three recommend a “Moderate Buy,” and six are cautious with a “Hold” rating. The average price target of $341.58 suggests a 3% upside potential from here. Meanwhile, the Street-high target of $400 suggests GOOGL stock could rise 21%.

On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.