Alphabet (NASDAQ: GOOGL) has reported a larger-than-expected increase in capital spending for the past quarter, but Google stock price targets suggest analysts are still confident in the technology conglomerate.
Notably, Barclays raised its price target on Alphabet on July 23 from $405 to $425 while reiterating its “Overweight” rating on solid leadership across the artificial intelligence (AI) ecosystem despite near-term cost pressures.
The brokerage further added that the second-quarter results only reinforced Alphabet’s position at every major layer of AI, from consumer applications such as Search and Gemini to AI models, which the management believes could accelerate in the coming quarters as AI adoption expands.
However, the firm warned that Alphabet faces mounting expenses as it competes with rivals including Anthropic, OpenAI, and Amazon Web Services (AWS). At the same time, Barclays lowered its free cash flow forecast due to increased capital expenditures and trimmed its earnings-per-share (EPS) estimates for the fourth quarter and the first quarter of 2027.
Evercore reiterates its Google price target
Following the report, Evercore ISI reiterated its “Outperform” rating on Alphabet, maintaining a $420 price target and expressing optimism despite investor concerns over rising AI expenditures.
Analyst Mark Mahaney stated that while the bar was high, the company managed to mostly clear it, with the Cloud being the standout business, with 82% revenue growth and 36% operating margins.
“Our Take: The bar was high, and in our opinion, GOOGL mostly cleared it. Most impressive are the Cloud results – both the 82% revenue growth and the record-high 36% operating margin. Looks like a positive read-through for the AI Trade,” Mahaney wrote.
In addition, Evercore raised its revenue and operating income estimates but increased its 2027 free cash flow loss projection from $20 billion to $50 billion due to the higher capital expenditure guidance.
Despite the Google stock price target increase, the shares plummeted 3.3% in after-hours trading, effectively wiping $138 billion from Alphabet’s market capitalization.
The downward move appears largely driven by earnings per share, which came in at $2.85, lower than the expected $2.89.
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