Raymond James has upgraded Alphabet to a Strong Buy, anticipating significant growth driven by its AI stack. Analyst Josh Beck cited upward revisions to medium-term estimates, particularly for Google Cloud Platform (GCP) and Search. He anticipates the company is entering a cycle of improving AI narratives, which could drive top-line growth. This upgrade reflects confidence in Alphabet's AI-driven future.

Beck forecasts substantial GCP growth, with a 44% rise in 2026 and 36% in 2027, exceeding market expectations. He highlights strong contributions from infrastructure, platform services, and increased adoption of Gemini API and Vertex AI. The analyst estimates GCP could exit 2027 with billions in annualized revenue from various AI services. The firm set a $400 price target.

For Search, Beck projects 13% growth in both 2026 and 2027, driven by AI Overviews, AI Mode, and Gemini. He expects AI-driven queries to support higher-than-average cost-per-click growth. This upgrade suggests that Alphabet's investments in AI are poised to deliver substantial financial returns. Google has made large investments in AI.

This positive outlook stems from the belief that Alphabet's AI initiatives are poised to accelerate revenue growth across both cloud services and search functionalities. The upgrade signals optimism about the company's ability to capitalize on the burgeoning AI market. Investors will be watching Google's next earnings report for further details on AI's impact.