Analysts are turning heads in the tech sector, and their eyes are now on Alphabet stock (NASDAQ:GOOG, NASDAQ:GOOGL). MoffettNathanson recently raised its price target for GOOGL to $295, implying roughly 20% upside from current levels. Could Alphabet replace Nvidia (NASDAQ:NVDA) as the world’s most valuable company? Many experts believe so.
AI Leadership Gives Alphabet Stock an Edge
Michael Nathanson of MoffettNathanson sees Alphabet as the clear leader in the AI race. Google’s advantages are multifaceted:
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Leadership in multimodal search combining text, images, and video.
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Accelerating growth of Google Cloud (NASDAQ:GOOGL), which now generates $50 billion annually.
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Enhanced monetization opportunities on YouTube.
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The emerging Waymo business, adding long-term growth potential.
Recent regulatory challenges are fading, as antitrust rulings were lighter than expected. Concerns about ChatGPT replacing search are overstated, with early data showing that AI chatbots actually drive more search traffic. Google’s Gemini AI is gaining traction, with prediction markets favoring it over ChatGPT for “best AI” by year-end.
Google Cloud: The Hidden Powerhouse
Google Cloud is proving to be Alphabet’s secret weapon. Nine of the top 10 AI labs and nearly every AI unicorn run on its platform. The division processes twice as many AI tokens as competitors in half the time, thanks to custom TPUs and in-house AI models like Gemini.
Customer growth remains strong: 28% growth in new clients in H1 2025, while existing clients adopting AI tools spend 1.5 times more. Alphabet’s cloud contract backlog sits at $106 billion, with over half expected to generate revenue within two years.
Custom AI agents for specific industries and a growing e-commerce footprint through Google Shopping are driving further expansion. Cloud margins continue to improve, supported by years of investment in specialized hardware and software optimization.
YouTube and Waymo: Additional Catalysts
YouTube is on the cusp of a monetization breakthrough with AI-enabled brand partnerships and commerce tools. Meanwhile, Waymo continues to expand across U.S. cities, providing Alphabet stock with an additional long-term growth avenue.
Strong Q2 2025 Performance
Alphabet delivered solid second-quarter results, with revenue climbing 14% to $96.4 billion. Search revenue rose 12%, and YouTube advertising grew 13%. The Gemini AI app now has 450 million monthly users, with daily requests up 50% since Q1. Google processes nearly one trillion AI tokens monthly, doubling since May 2025.
Capital spending is projected at $85 billion for 2025, with further increases expected in 2026 to support cloud expansion. Operating margins remained stable at 32%, while trailing 12-month free cash flow was $66.7 billion. Alphabet also returned $16.1 billion to shareholders through buybacks and dividends.
Is Alphabet Stock Still Undervalued?
Analysts forecast Alphabet’s sales to grow from $350 billion in 2024 to $600 billion by 2029. Adjusted earnings per share could jump from $8 to $17.75 over the same period. Currently, GOOGL trades at 24.8 times forward earnings, slightly above its 10-year average of 23.8 times. If valued at 20 times forward earnings, the stock could reach $355 by early 2029, suggesting a 45% upside from today.
Out of 54 analysts covering Alphabet stock, 40 recommend “Strong Buy,” five “Moderate Buy,” and nine “Hold.” The average price target sits at $242.80, just below the current trading price of $243.
Conclusion
With AI leadership, robust cloud growth, YouTube monetization potential, and the long-term promise of Waymo, Alphabet stock remains a compelling pick for investors seeking exposure to the next generation of tech innovation. Analysts’ bullish outlook underscores the belief that Alphabet could soon challenge Nvidia for the top spot among the world’s most valuable companies. Its diversified business model and continued investment in AI and cloud infrastructure position it for sustained growth over the coming years.
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