GOOG
Cloud is the new headline act
JPMorgan’s Doug Anmuth basically gave Alphabet a pep talk and a trophy at the same time: Overweight rating, $395 price target, and Top Pick status. The timing isn’t random either — it lands just ahead of Google Cloud Next in Las Vegas, where the market will be listening for any hint that Cloud is becoming Alphabet’s real growth machine.
Why the bank is getting excited
The big thesis here is simple: Google Cloud is no longer the side character in Alphabet’s story. JPMorgan says it’s now the company’s second-largest business, and it expects Cloud to make up about 19% of total revenue in 2026. The part that really gets analysts salivating? Cloud backlog reportedly jumped 160% year over year to $240 billion in late 2025. That’s not a typo — that’s the kind of number that makes investors perk up like they just heard free snacks are back in the office.
Agentic AI: the next buzzword with a business model
JPMorgan expects Cloud Next to lean hard into the “agentic cloud” pitch, where AI agents handle multi-step workflows and, in theory, make customers stickier. In plain English: if your software starts doing the boring work for you, you probably don’t cancel it next month. The bank argues that should help margins, with Google Cloud operating margins seen reaching 27.9% in 2026 even while Alphabet keeps spending aggressively on infrastructure.
Big spending, bigger expectations
Alphabet’s 2026 capex guide of $175 billion to $185 billion is still eye-watering, but the market seems increasingly willing to tolerate the burn if it helps Google keep pace in AI. JPMorgan also pointed to the Wiz deal and the Intersect Power purchase as signs Alphabet is building a broader moat — security on one side, power and infrastructure on the other.
Big picture: Alphabet doesn’t just want to be the search box you keep coming back to. It wants Cloud to become the sticky, recurring revenue engine that makes the whole story look a lot less like an ad business and a lot more like an AI platform.