Wall Street’s Renewed Confidence in Alphabet’s AI Trajectory

As 2025 draws to a close, Alphabet stands out as the top performer among the "Magnificent Seven" tech stocks. A significant shift in sentiment has taken hold on Wall Street, dispelling earlier concerns that Google might fall behind in the artificial intelligence race. This renewed optimism is underscored by fresh user metrics for its Gemini AI platform and a bullish analyst note issued on the final trading day of the year.

Beyond its core operations, Alphabet's strategic investments—long undervalued by the market—are coming into sharper focus. Two key subsidiaries are poised to play a substantial role in 2026:

• Waymo: The autonomous driving unit reported a 24% quarter-over-quarter increase in miles driven and is now operating in more than ten U.S. cities.
• SpaceX Stake: Alphabet maintains an approximate 7% ownership stake in SpaceX. A potential IPO for Elon Musk's space venture in 2026, as speculated, could unlock significant latent value on Alphabet's balance sheet.

Furthermore, the cloud computing division continues to be a pillar of strength for the company's valuation. Google Cloud is expanding at a rate exceeding 30%, outpacing the broader market and helping to justify the stock's elevated price-to-earnings ratio of just over 30.

Should investors sell immediately? Or is it worth buying Alphabet?

A Notable Price Target Revision

Adding momentum to the positive year-end narrative, Andrew Boone, an analyst at Citizens Investment Bank, made a notable adjustment. He raised his price target for Google's parent company from $340 to $385 per share. This revision suggests further upside potential, even after the stock's impressive 70% rally since the start of the year.

The primary driver behind this upgraded assessment is the tangible progress in Alphabet's AI execution. Recent market data indicates the user base for its Gemini large language model has grown to approximately 650 million monthly active users. Market observers interpret this rapid adoption rate as clear evidence that Google can not only defend its dominance in search but also effectively build new revenue streams around AI. The broader analyst community echoes this view, with 53 out of 62 covering analysts now rating the stock a "buy."

The Road Ahead for 2026

Attention is now turning to the upcoming fiscal year, where analysts project revenue growth of around 14%. The imminent earnings season will be critical. Investors are keenly awaiting details on the massive AI infrastructure investments, estimated at $93 billion for 2025. If the company can continue to successfully translate these expenditures into accelerated growth for its Cloud and advertising segments, the current positive trend is likely to sustain.