Analyst Firm Raises Alphabet Price Target Following Generative AI and Cloud Survey

TD Cowen has adjusted its price target for Alphabet Inc. (GOOGL) to $270 from $240, while reaffirming its 'Buy' rating on the shares. This revision comes after the firm's comprehensive 2025 GenAI Public Cloud Survey, which highlighted strong market penetration and positive sentiment for Google Cloud Platform (GCP) and Google's Gemini generative AI large language model (LLM). The upgrade reflects increasing confidence in Alphabet's growth trajectory within the competitive artificial intelligence and cloud computing landscapes.

Survey Reveals Strong Positioning for GCP and Gemini

The annual GenAI Public Cloud Survey by TD Cowen provided key insights into the enterprise adoption of cloud and generative AI technologies. Google Cloud Platform (GCP) demonstrated solid performance, securing its position as the third-ranked cloud service in terms of overall awareness, registering 80% among respondents, trailing Amazon Web Services (AWS) at 94% and Microsoft Azure at 93%. Notably, GCP's awareness was particularly pronounced within the Enterprise group, reaching 88%.

More significantly, GCP emerged as the second-place choice for companies considering adding another cloud provider, with 44% of respondents indicating plans to incorporate GCP, an increase from 37% in the previous year's survey. For companies looking to replace an existing provider, 38% expected to choose GCP, placing it third behind Azure (72%) and AWS (67%).

In the generative AI segment, Google's Gemini solidified its standing as the second most popular LLM provider. The survey indicated that 54% of respondents utilize Gemini for their GenAI tools, an increase from 50% in the 2024 survey. While OpenAI remained the top choice at 73%, its usage saw a slight decline from 82% in the prior year, suggesting a diversification in LLM providers. Emerging players like Anthropic (35%) and Meta Platforms (META) with Llama (24%) also gained traction.

Market Reaction and Broader Implications

The analyst upgrade and positive survey findings are likely to bolster investor confidence in Alphabet, particularly concerning its strategic advancements in AI and cloud computing. Alphabet recently achieved a significant milestone, with its market capitalization surpassing $3 trillion, reflecting renewed optimism surrounding its artificial intelligence initiatives and a favorable antitrust ruling. Class A shares of GOOGL advanced 4.6% to $251.88, and Class C shares climbed 4.5% to $252.30, both reaching record highs. Over the past year, the stock has delivered impressive returns of 59%.

Financially, Alphabet exhibits robust health. In Q1 2025, consolidated revenues increased 12% year-over-year to $90.2 billion, with Google Cloud revenues specifically growing 28% to $12.3 billion. The company's three-year revenue growth rate stands at 13.9%, accompanied by an operating margin of 32.68% and a net margin of 31.12%. Valuation metrics, including a P/E ratio of 26.9, P/S ratio of 8.36, and P/B ratio of 8.42, are near historical highs, indicating a premium market sentiment.

The company's commitment to these growth areas is underscored by its increased capital expenditures. Alphabet now projects to invest approximately $85 billion in CapEx in 2025, an upward revision from a previous estimate of $75 billion. This increase primarily supports investment in servers and accelerates data center construction to meet escalating cloud customer demand, with further increases anticipated for 2026.

Expert Commentary

Analysts led by John Blackledge of TD Cowen highlighted GCP's "solid showing" in their annual survey, noting the sustained gap between GCP and market leaders AWS and Azure in overall awareness. However, Blackledge and his team emphasized Gemini's growing adoption, stating,

"Google was the 2nd most commonly-used provider (54% of respondents, rising from 50% in our 2024 survey)."

During Alphabet's Second Quarter 2025 Earnings Conference Call, Sundar Pichai, CEO of Alphabet and Google, affirmed the strong performance of Google Cloud, stating,

"We see strong customer demand, driven by our product differentiation and our comprehensive AI product portfolio." He further highlighted a 35x growth in Gemini usage year-over-year, with over 85,000 enterprises utilizing the AI model. The number of deals over $250 million doubled year-over-year, and Google Cloud signed as many deals over $1 billion in the first half of 2025 as it did in all of 2024.

Looking Ahead

Alphabet's strategic investments and performance in generative AI and cloud computing position it for continued expansion. The increasing adoption of GCP as an additional cloud provider and Gemini's growing presence in the LLM market suggest a positive long-term trajectory. The company's significant capital expenditure plans indicate a commitment to scaling infrastructure to meet burgeoning demand, particularly in AI-driven services. Key factors to monitor include Google's ability to further narrow the awareness gap with AWS and Azure, the sustained growth of Gemini against evolving competition, and the financial impact of its substantial AI investments. Future developments, such as the planned release of Gemini 2.0 in late 2025, focused on advanced multimodal AI, could further solidify its market position.