Citizens’ $515 price target for Alphabet Inc. (NASDAQ:GOOGL) may look like a stretch, sitting at a street-high above the $425 average. However, this aggressive target is based on something concrete, representing approximately 32 times its 2027 estimated GAAP earnings per share for the company.
Analyst Andrew Boone reiterated the target on August 26, along with a Market Outperform rating. As per the firm, the rating depends on Alphabet’s consumer distribution across search, YouTube and Android platforms, with growth of Google Cloud Platform and the company’s leading profit margins acting as supporting factors.
Photo by Kai Wenzel on Unsplash
The Bull Case for Alphabet
While online advertising makes up a major part of Google’s revenue, Google Cloud is becoming a major part of Alphabet Inc. (NASDAQ:GOOGL)’s business. Google Cloud’s growth rate surged to 82% growth in Q2 2026, outpacing even Amazon Web Services and Microsoft Azure.
This growth rate was a sequential acceleration from the 63% growth rate reported in the first quarter and the 48% growth rate in the fourth quarter of 2025; largely driven by massive enterprise demand for artificial intelligence.
Cloud is accelerating, a positive for the company. Meanwhile, the company’s TPU chips are now being sold to outside customers, a business that could see meaningful growth. As per Morgan Stanley, Google may make around $200 billion in income linked to its TPUs over the next several years.
If we couple this with Search, Android, and Youtube platforms, we can see a strong bull case for the stock.
What’s Working Against The Stock
Alphabet may be growing, but the question remains on what it must spend to sustain its growth. As of Q2, capital expenditures reached $44.9 billion, doubling year-over-year. The tech giant also raised its full-year 2026 guidance to $195 billion and $205 billion. Investors weren’t very excited about this, with many selling the Q2 print on spending concerns.
Google CFO Anat Ashkenazi has already warned that the free cash flow will remain squeezed as the company continues to spend aggressively on infrastructure. The company also plans to use third-party capacity to meet Cloud demand, likely to create margin pressure.
Couple this with other events such as scientist Jeff Dean’s abrupt departure from the company, and Demis Hassabis stepping back from day-to-day leadership of Google DeepMind, a lot of factors have been working against the stock as well.
Hedge Fund Sentiment and Analysis
Hedge fund interest has been increasing for Alphabet as can be seen from Insider Monkey’s database tracking hundreds of hedge funds. As of the second quarter, 275 hedge funds held positions in Alphabet at the end of Q2, up from 265 in the previous quarter.
Overall, Alphabet’s cloud growth provides strong evidence that its AI investments are translating into revenue. However, investors are yet to see whether the company can convert this momentum into sustained earnings growth while absorbing infrastructure spending.
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