BUZZ-Street View: Brokerages upbeat on Alphabet's long-term AI abilities
Brokerages remain constructive on Alphabet's AI and cloud outlook
- Morgan Stanley (
overweight, PT: $400) says Google's cloud backlog growth supports expectations for durable long-term demand. - Morgan Stanley said, "Big picture, we continue to view hyperscaler revenue growth and EBIT margins as the cleanest near-term signals on GenAI investment ROIC."
- Piper Sandler (
overweight, PT: $395) said, "the business model appears to be morphing rapidly from high margin ads to one dominated by Cloud where FCF is almost certainly negative in '27". - Roth MKM (
buy, PT: $440) sees Google as a "top-tier, long-term AI compounder across its full stack and would use near-term weakness to add to positions". - Canaccord Genuity (
buy, PT: $450) said it is constructive on the company's ability to continue delivering and monetizing frontier-level AI capabilities.
Alphabet faces scrutiny after cloud growth and higher capital spending plans
Alphabet GOOGL.O on Wednesday reported its best-ever quarter of growth for its cloud computing division, but faced investor scrutiny after concerns about continued delays to its flagship AI model were aggravated by a $15 billion increase in capital spending plans for 2026.
Shares were down 3.6% to $329.6 premarket.
