Alphabet's Cloud Dominance Spurs 50% Price Target Upsurge

Alphabet's second-quarter results show that Google Cloud is no longer just a sidekick to Search. Cloud revenue grew 82% to $24.8 billion, and its backlog jumped more than $50 billion sequentially to $514 billion.

This backlog alone is larger than Alphabet's entire fiscal 2025 revenue base. The growth rate of Cloud dwarfs that of Search, making it a key driver for the company's future success.

Our analysis suggests that the valuation gap between Alphabet and its peers Microsoft and Amazon provides strong support for our price target of $504.76, implying 50.47% upside from the current price of $335.45. This recommendation is based on a buy rating with a model confidence level of 90%.

The bull case points to a price of $569.14, driven by Cloud growth and other non-Search catalysts such as Waymo's autonomous rides and YouTube's revenue run rate above $60 billion.