Alphabet's AI Shake-up: A Growth Story Remains Intact
Alphabet's AI leadership shakeup has sent shockwaves through the tech industry, but analysts say the underlying growth story remains intact. Chief Scientist Jeff Dean is departing to launch his own startup, Discovery Loop, while DeepMind CEO Demis Hassabis is stepping into a chairman role and taking on the Chief Scientist title for Alphabet.
DeepMind technology chief Koray Kavukcuoglu has been promoted to head Google's AI division and will lead development of Gemini 4. The reshuffle comes as Google ramps up its AI push, forecasting up to $205 billion in 2026 capex and posting negative cash flow for the first time on record.
Alphabet's cloud business is outpacing rivals, with revenue up 82% last quarter versus 37% for Amazon's AWS and 43% for Microsoft Azure. Google Cloud revenue soared 24% year-over-year to $24.8 billion, with cloud operating income nearly tripling to $8.8 billion.
Alphabet shares fell about 4% on the shakeup news, but Wall Street still overwhelmingly favors GOOGL stock. Alphabet holds a consensus “Strong Buy” rating from 54 analysts with coverage, with a mean price target of $429.02 implying about 21% potential upside from current levels.