Key Takeaways:
- BofA projects Q2 revenue of $102.1B, topping consensus by $1.1B
- EPS estimate of $8.38 towers over Street view of $2.90
- Cloud acceleration and Anthropic stake drive the bullish call
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BofA lifts Alphabet EPS estimate 189% to $8.38 on Cloud strength
Bank of America raised its Q2 earnings estimate for Alphabet to $8.38 a share, nearly three times the Street consensus of $2.90.
"Alphabet is set to post a blockbuster second quarter driven by surging Cloud growth and a sharp jump in the value of its Anthropic stake," the Bank of America analyst team said in a note dated July 16.
The bank projects second-quarter revenue of $102.1 billion, above the $101 billion consensus. Google Cloud revenue has emerged as the primary growth engine, with the segment backlog swelling to more than $460 billion in contracted forward revenue. Alphabet's stake in AI startup Anthropic has also appreciated sharply, adding a non-operating tailwind to the quarter.
The estimate revision positions Alphabet for its fifth consecutive EPS beat. Shares traded at $370.92 as of July 15, and the BofA Buy rating implies the stock has room to run as Cloud monetization and AI adoption accelerate through the second half of 2026.
The $8.38 EPS projection represents a roughly 189% premium to the $2.90 consensus, reflecting BofA's conviction that Cloud revenue is compounding faster than the broader business. Google Cloud generated $20 billion in Q1 2026, up 63% year over year, and the segment's contracted backlog nearly doubled quarter over quarter.
Alphabet guided 2026 capital expenditure to $175 billion to $185 billion, a level that compressed Q1 free cash flow to $10.12 billion, down 46.63% year over year. The heavy spending shows management is betting that AI infrastructure investment will pay off through Cloud contract wins and Gemini monetization across Search and YouTube.
The BofA call is among the most bullish on the Street. Analyst consensus on Alphabet stands at $431.72, with 89% of covering analysts rating the stock a Buy and zero Sell ratings among 64 analysts tracked.
The estimate raise shows BofA expects Alphabet's AI investments to translate into accelerating earnings power. Investors will watch the Q2 earnings report, expected in late July, for Cloud segment margins and updated capital spending plans.
This article is for informational purposes only and does not constitute investment advice.
