Alphabet’s Price Target Lifted to $400 as Capex Set to Double
Scotiabank kept its Outperform rating on Alphabet and raised its price target from $375 to $400, while Mizuho boosted its target to $400 from $365 following a notable top-line beat. Alphabet will double capital expenditures this year as an AI spending wave expected to top $500 billion industry-wide.
1. Analyst Ratings Update
Following a quarter that exceeded revenue forecasts, Scotiabank maintained an Outperform rating on Alphabet and increased its price objective from $375 to $400. Mizuho also raised its target to $400 from $365, citing stronger-than-expected advertising and cloud performance.
2. Financial Performance Drivers
Alphabet delivered a significant top-line beat, with advertising revenue and cloud services driving overall growth beyond consensus projections. The robust results have bolstered expectations for continued margin expansion and solid earnings momentum.
3. Capital Spending Plans
Management revealed plans to nearly double capital expenditures in the current fiscal year, focused on expanding data center capacity and AI compute infrastructure. The increased investment aims to address compute constraints and accelerate AI research and deployment.
4. AI Investment Context and Outlook
This capex surge aligns with a broader industry AI spending wave projected to exceed $500 billion among major technology players. While such investment underpins long-term innovation, it may pressure free cash flow and demands disciplined execution to secure attractive returns.