Last Update20 Oct 25
Fair value Increased 4.61%

Alphabet's analyst price target has been raised from approximately $242 to $253. This reflects increased confidence from analysts in ongoing margin expansion, resilient ad revenues, and Alphabet's leading position in artificial intelligence and cloud growth.

Analyst Commentary

Recent Street research features a range of perspectives on Alphabet's outlook, with price targets trending upward while some analysts voice concerns about execution risks. Below are key themes reflecting both optimistic and cautious views:

Bullish Takeaways

Bullish analysts highlight Alphabet’s accelerating growth in Google Cloud Platform, which supports expectations for further margin expansion and robust financial performance.
Positive developments in artificial intelligence, including momentum in Gemini and deep integration of AI across Search, Cloud, and YouTube, are seen as drivers for long-term value creation.
The recent antitrust court decision is widely regarded as favorable. It lifts a significant overhang and allows Alphabet to maintain critical distribution agreements, supporting a re-rating of the stock.
Ongoing dominance in core markets, such as Search and high-value commercial queries, continues to underpin Alphabet’s competitive moat against emerging AI search competitors.

Bearish Takeaways

Bearish analysts point to near-term challenges in scaling certain business units. They note that ventures like Waymo food delivery face unfavorable unit economics and high costs, which could hinder margin improvement if not resolved.
While AI and Cloud are growth engines, increased competition and potential disruption from generative AI platforms remain risks to future market share and advertising revenue resilience.
Some caution that current valuation may already reflect much of the anticipated growth, particularly after the stock’s recent rally and with only moderate upward earnings revisions from recent events.
Ongoing regulatory scrutiny and structural changes mandated by recent antitrust rulings, although manageable, contribute to execution risk as Alphabet adjusts to new operational constraints.

What's in the News

Google and Salesforce expanded their strategic partnership to integrate Google’s Gemini AI across the Salesforce Agentforce 360 Platform and Google Workspace. This integration enables seamless automation, multimodal reasoning, and AI-powered business process enhancements for enterprise customers. (Strategic Alliances)
Waymo, Alphabet's self-driving unit, plans to launch driverless ride-hailing services in London by 2026. The company is collaborating with Moove and local regulators to secure necessary approvals. (Reuters)
Google has offered to make further changes to its search results to avoid a European Union antitrust fine, reflecting continued regulatory pressure over alleged preferential treatment in search. (Reuters)
Alphabet has been preparing to sell or spin off its life sciences unit, Verily. The plans are to make it fully independent from Google and the broader Alphabet group. (Bloomberg)
Alphabet became the fourth company to reach a $3 trillion market capitalization, joining the ranks of Nvidia, Microsoft, and Apple, following a favorable antitrust ruling. (CNBC)

Valuation Changes

Consensus Analyst Price Target (Fair Value): Increased from $241.59 to $252.73, showing a modest upward adjustment.
Discount Rate: Rose slightly from 7.88% to 7.89%, reflecting minimal change in perceived risk or market conditions.
Revenue Growth: Marginally improved at 11.46%, indicating stable growth expectations.
Net Profit Margin: Increased from 29.22% to 30.03%, suggesting analysts now expect greater profitability.
Future P/E: Increased slightly from 23.54x to 23.97x, pointing to a minor rise in projected valuation multiples.

Accelerating AI adoption and innovation are driving increases in user engagement, search monetization, and sustained revenue growth across core businesses.
Diversifying products and expanding globally, particularly in cloud services and subscriptions, are improving margins and strengthening long-term growth potential.
Heavy infrastructure spending, reliance on ad revenue, legal pressures, unprofitable new ventures, and rising competition threaten Alphabet's future profitability and market position.

Catalysts

About Alphabet

Offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America.What are the underlying business or industry changes driving this perspective?

Accelerating adoption of AI-powered features (such as AI Overviews, AI Mode, and Gemini 2.5) is increasing user engagement and commercial search query volume, positioning Alphabet to monetize a larger user base and expand advertising-driven revenue on a forward-looking basis.
Surging demand for Google Cloud's AI infrastructure and services, evidenced by record multi-billion dollar deals, a 38% YoY increase in backlog, and ongoing capacity expansion, suggests continued revenue growth and margin improvement as scale efficiencies are realized.
Rapid growth in YouTube Shorts and expanding YouTube subscription offerings are diversifying revenue streams and boosting monetization, which should drive both top-line growth and incremental improvements in net margins as premium content and subscriptions scale.
Continued momentum in global internet penetration, smartphone adoption, and emerging market engagement (e.g., Lens, Circle to Search, virtual try-on) is enlarging Alphabet's addressable market and supporting scalable ad and subscription revenue expansion.
Alphabet's significant investment in custom AI hardware (TPUs), software optimization, and R&D is expected to further improve operating leverage, translating sustained innovation leadership into higher productivity, operating margins, and long-term earnings growth.

Alphabet Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Alphabet's revenue will grow by 11.3% annually over the next 3 years.
Analysts assume that profit margins will shrink from 31.1% today to 28.9% in 3 years time.
Analysts expect earnings to reach $148.4 billion (and earnings per share of $12.81) by about September 2028, up from $115.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $126.4 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.9x on those 2028 earnings, down from 25.1x today. This future PE is greater than the current PE for the US Interactive Media and Services industry at 17.0x.
Analysts expect the number of shares outstanding to decline by 1.2% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.97%, as per the Simply Wall St company report.

Alphabet Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Alphabet's record-high capital expenditures-forecasted to reach $85 billion in 2025 and likely to increase into 2026-will place sustained pressure on net margins and earnings due to accelerating depreciation and infrastructure costs, creating long-term risk if revenue growth does not keep pace.
Despite robust growth in Search and YouTube, Alphabet remains highly dependent on advertising revenues from these sources, and any shift in consumer behavior toward alternative platforms (such as VR, AR, decentralized social, or privacy-centric apps) or slowing ad market growth could reduce revenue and compress profitability.
Increasing legal and regulatory pressures-including a $1.4 billion legal settlement this quarter, ongoing antitrust scrutiny globally, and tightening data privacy laws-pose ongoing risks to Alphabet's core business models, potentially forcing structural changes that could lower market share and long-term earnings power.
Alphabet's substantial investments in "Other Bets" businesses, notably Waymo and experimental hardware (e.g., AI-enabled glasses), continue to generate significant operating losses without a clear path to material profitability, potentially eroding group net margins if these efforts fail to scale commercially.
Elevated competition in both digital advertising (from platforms like Amazon, TikTok, and retail media networks) and cloud (from AWS, Azure, and open-source AI providers), coupled with industry trends such as increased ad blocking and a shift to zero-click/AI-overview search responses, could erode Alphabet's ad pricing power and reduce core revenue and earnings growth over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $231.48 for Alphabet based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $300.0, and the most bearish reporting a price target of just $166.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $512.6 billion, earnings will come to $148.4 billion, and it would be trading on a PE ratio of 22.9x, assuming you use a discount rate of 8.0%.
Given the current share price of $239.63, the analyst price target of $231.48 is 3.5% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.