As the Google parent company edges closer to a $4 trillion market capitalization, a new bull cheers AI advantages that can keep the rally going
Alphabet's artificial-intelligence capabilities have made the company a formidable name in the technology landscape, powering the stock to a 65% gain in 2025. And that could be just the beginning, as Wall Street firm Cantor Fitzgerald now sees more room to run for the Google parent company.
In a Wednesday note, analyst Deepak Mathivanan upgraded Alphabet's stock to overweight from neutral with a price target of $370, calling the company the "king of all AI trades."
Google's advantage comes from its footprint across the entire AI tech stack, encompassing infrastructure, compute, large language models and applications, Mathivanan wrote - making the company "well positioned to reap the benefits of its broad footprint over the next two to three years with accelerated distribution of its AI assets."
Sentiment around Alphabet is already elevated, as evidenced by last year's "Magnificent Seven"-leading performance. On Wednesday, Alphabet's stock rose over 2%, leading the company to overtake Apple as the world's second-largest company by market capitalization. Now it's set for its first record finish since late November, and is closing in on levels that would translate to a $4 trillion market capitalization, according to Dow Jones Market Data.
Alphabet shares are trading at 25 times Cantor Fitzgerald's estimated 2027 earnings, a premium to the stock's historic trading range. However, Mathivanan believes the valuation is warranted when considering the potential for revenue growth to accelerate, especially in the Search and Google Cloud businesses. Cantor Fitzgerald's price target is based on a 30x price-to-earnings multiple.
In Search, the integration of Google's AI Overviews and AI Mode is driving an acceleration in query volume. Google's AI Max product, which offers AI-powered features for advertising campaigns, is helping to place ads inside AI Overviews and achieving a high return on invested capital, Mathivanan wrote.
While Search revenues could see short-term "air pockets" as AI Overviews penetration ramps, Mathivanan expects AI results to monetize at a higher rate than traditional results over time due to more comprehensive answers and higher user-conversion rates.
Competition between Google's Gemini and OpenAI's ChatGPT will continue to be fierce in 2026, and Mathivanan believes both chatbots could grow to over 1 billion active users in the next 12 to 18 months.
While he sees room for more than one winner, Mathivanan pointed to Gemini's advantage in leveraging data from Search, Maps, merchant product feeds and other proprietary Google sources, which could give Gemini a leg up in agentic AI applications such as shopping. Google is also using its existing distribution channels to make Gemini the default LLM across Android smartphones, Mathivanan added.
Google Cloud is positioned for significant market-share gains this year, and Mathivanan predicts that its revenue could come to be 60% of Amazon.com's cloud revenue by 2027, up from just over 40% in 2024. A major catalyst for this is the substantial increase in Google Cloud's pipeline of deals with major AI labs like Anthropic, OpenAI and Meta Platforms. Those are expected to translate into recognized revenue as more capacity comes online.
According to Cantor Fitzgerald, Google could potentially bring up to 20 new data-center campuses online by the end of 2027.
Combined with Google's custom tensor processing units, this infrastructure advantage allows the company to compete aggressively on price as AI deployments accelerate across consumer and enterprise applications, Mathivanan said.
