Alphabet Inc. (NASDAQ:GOOGL) is one of the best Seth Klarman portfolio stocks to buy. On July 2, Wells Fargo lowered its price target on Alphabet Inc. (NASDAQ:GOOGL) to $416 from $435, while maintaining its Overweight rating.
Analyst Ken Gawrelski made the revision and noted that even with the lower target, he remains upbeat about Alphabet’s near-term performance. Gawrelski projected Alphabet’s Q2 FY 2026 search revenue to grow by 17% year over year and total Google revenue to expand by 32%. Google is a component of Alphabet. The analyst also expects core Google revenue, which excludes the Gemini AI product line, to grow by 28%.
For the full FY2026, Wells Fargo expects search revenue to grow 16%, which, in the analysts’ view, reflects continued strength in Alphabet’s core advertising business despite competitive pressure from AI-driven search alternatives. On the cloud side, Wells Fargo actually raised its Q2 cloud revenue growth forecast to 72%, which is well above Wall Street’s estimate of 65%. The firm cited ongoing capacity-driven momentum and incremental profit margins holding steady around 50%.
Wells Fargo also expects Alphabet’s custom AI chips, known as tensor processing units, or TPUs, to become a meaningful external revenue source starting in the third quarter. TPU sales are likely to accelerate revenue growth to around 150% in the second half of the year, Gawrelski said. However, the analyst expects the profitability of those chip sales to be lower, and with incremental margins dropping into the low 30s.
Alphabet Inc. (NASDAQ:GOOGL) is a technology holding company, which operates through Google Services, Google Cloud, and Other Bets segments. It offers products and services including Search, ads, Android, Google Play, Chrome, Google Maps, devices, and YouTube.
While we acknowledge the potential of GOOGL 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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