UBS raises Alphabet stock price target to $306 on cloud growth

Investing.com - UBS raised its price target on Alphabet (NASDAQ:GOOGL) stock to $306.00 from $255.00 on Thursday, while maintaining a Neutral rating on the shares. The stock is currently trading at $288.81, up from $267.47 at previous close, and has already surpassed its 52-week high of $275.34.

The price target increase follows Alphabet’s strong performance across all major business segments, including Search, YouTube, and Cloud services. With a market capitalization of $3.49 trillion, Alphabet has delivered impressive revenue growth of 13.13% over the last twelve months, reaching $371.4 billion.

UBS highlighted Google Cloud’s disclosed backlog of $155 billion, with 50-55% expected to convert to revenue within the next two years, positioning Google to become "a substantially larger company than investors had expected."

The firm noted that while Alphabet increased its 2025 capital expenditure guidance by $6-8 billion, the additional spending is directly linked to upcoming cloud revenues, which offsets some concerns about return on investment. According to InvestingPro data, Alphabet trades at a P/E ratio of 30.43 but maintains a low PEG ratio of 0.77, suggesting it’s reasonably valued relative to its growth prospects.

UBS revised its earnings per share estimates upward by approximately 6% for 2026 and 5% for 2027, citing Alphabet’s "consequential expansion" in both advertising and cloud businesses driven by generative AI technology. With current diluted EPS of $9.39 and analysts projecting $10.00 for fiscal year 2025, investors seeking deeper insights can access Alphabet’s comprehensive Pro Research Report, one of 1,400+ available on InvestingPro.

In other recent news, Alphabet reported third-quarter revenues and earnings before interest and taxes (EBIT) that surpassed analysts’ expectations by 2% and 8%, respectively. This performance was driven by growth in several segments, including search and Google Cloud Platform, supported by advancements in artificial intelligence. Following these results, Cantor Fitzgerald raised its price target for Alphabet to $310, maintaining a Neutral rating. KeyBanc also increased its price target to $330, citing Alphabet’s comprehensive AI capabilities as a key driver of momentum in its Search and Cloud segments.

Rosenblatt adjusted its price target to $279, highlighting the strength of Google Cloud as a standout segment. Stifel raised its target to $333, noting significant growth in Google Cloud’s revenue and backlog, with improving operating margins. HSBC set its price target at $335, pointing to a 43.3% increase in Google Cloud’s revenue backlog, which reached $155 billion. These developments reflect a positive outlook on Alphabet’s strategic focus on AI and cloud services.

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