Alphabet (GOOGL) Stock Is Down 3% — Here’s Why One Analyst Thinks That’s an Opportunity

TLDR

• 24/7 Wall Street issued a buy rating on GOOGL with a 90% confidence level, targeting a price of $445
• GOOGL opened Monday at $367, down more than 3% over the past month and struggling to reclaim $400
• Google Cloud revenue jumped 63% year-over-year in Q1 2026 to $20 billion, outpacing rivals
• Alphabet’s cloud backlog nearly doubled in a single quarter to $462 billion
• Alphabet trades at roughly 26 times forward earnings, below the growth rate its cloud business is posting

Alphabet’s GOOGL stock opened Monday at $367, down more than 3% over the past month and still unable to break back above the $400 level. Despite the soft price action, at least one research firm is making a firm call.

Alphabet Inc., GOOGL

24/7 Wall Street has issued a buy rating on GOOGL with a 90% confidence level, setting a price target of $445. That would represent a gain of roughly 21% from Monday’s open. A $1,000 investment at current prices would return around $1,200 if the target is hit.

The stock has been weighed down by broader concerns over Alphabet’s capital spending. The company expects to spend between $180 billion and $190 billion on data centers, servers, and networking in 2026, with management flagging that 2027 spending will rise further from there.

That’s a big number, and Wall Street has not been quiet about it. Microsoft, Amazon, and Meta are facing similar scrutiny over their AI infrastructure bills.

Cloud Is the Story

But the spending is not coming out of nowhere. Google Cloud posted $20 billion in Q1 2026 revenue, up 63% year-over-year. That’s an acceleration from the 48% growth it posted in the prior quarter, and it’s faster than what either of its two larger rivals reported.

Cloud operating income roughly tripled year-over-year to $6.6 billion. The segment’s operating margin expanded to 32.9%, up from 17.8% a year earlier.

CEO Sundar Pichai said on the Q1 earnings call that cloud revenue would have been even higher if supply could keep up with demand. The segment’s contracted backlog nearly doubled in a single quarter to $462 billion.

Pichai pointed to Alphabet’s ownership of its own silicon and frontier models — including its Gemini AI family — as a structural edge rivals cannot easily replicate.

Search Still Pulling Its Weight

Google Search and advertising revenue rose 19% year-over-year in Q1 2026 to $60.4 billion. Management said search queries hit an all-time high in the quarter, with AI features drawing more users in rather than pushing them toward alternatives.

The stock currently trades at about 28 times earnings and roughly 26 times forward earnings — close to a market-average multiple for a company whose cloud arm grew 63% last quarter.

That valuation gap is central to the bull case. The risks are real: free cash flow pressure from capex, advertising exposure in a potential economic slowdown, and ongoing regulatory scrutiny.

The 52-week range on GOOGL runs from $162.00 to $408.61. The stock is currently trading in the lower half of that range at $350.81 as of Monday’s session.

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