Alphabet’s AI Capex to Yield $19-23B Cloud, $5-6B Ad Revenue, Target Raised to $348
UBS raised its price target on Alphabet to $348 from $345 and kept a neutral rating as the stock trades near peak valuation multiples. Generative AI capex is expected to boost cloud revenue by $19-23 billion and ad income of $5-6 billion in 2026-2027, while limiting EPS growth to 1% in 2027.
1. UBS Raises Price Target and Retains Neutral Stance
On February 5, UBS raised its price target on Alphabet to $348 from $345 and maintained a neutral rating as shares trade near peak valuation multiples.
2. Generative AI Capex Projects Significant Revenue Gains
Generative AI capex is forecast to generate $19 billion to $23 billion in cloud revenue and $5 billion to $6 billion in advertising income during 2026-2027, although the higher spending is expected to constrain EPS growth to about 1% by 2027.
3. $15 Billion India AI Infrastructure Plan
On February 18, Alphabet announced a $15 billion initiative to expand AI capacity in India, including a new subsea gateway in Visakhapatnam, three new routes to Singapore, South Africa and Australia, and a partnership to digitize training for over 20 million public servants across 800 districts in 18 languages.