Wells Fargo raises Alphabet price target to $417 on TPU sales growth

Wells Fargo has increased its price target for Alphabet (NASDAQ: GOOGL), the parent company of Google, from $411 to $417. In an investor note released on October 6, the firm maintained its 'Overweight' rating, suggesting a potential 20% upside from the current share price of $346.47.

Analyst Ken Gawrelski highlighted that external TPU (Tensor Processing Unit) sales are expected to be a major growth driver for Google Cloud. Wells Fargo forecasts that Alphabet's 2027 revenue will exceed Wall Street estimates by 14%, primarily due to TPU-related sales. The firm also projects that 2028 revenue and earnings per share will surpass consensus expectations by 20% and 5%, respectively.

The analyst anticipates that Google will generate approximately $9.2 billion and $11.5 billion in external TPU sales during the third and fourth quarters of 2026. These sales are projected to significantly boost Google Cloud Platform revenue beyond current market expectations. Wells Fargo also raised its earnings-per-share estimates for 2026 and 2027 to $20.66 and $15.17, respectively, while increasing its 2027 revenue forecast by 4%.

Despite the optimistic outlook, Wells Fargo identified several risks, including increasing competition in search, questions surrounding the economics of TPU commercialization, and rising capital expenditures related to AI infrastructure expansion. Broader Wall Street sentiment remains favorable, with Alphabet maintaining a 'Strong Buy' rating and an average one-year price target of $426.26, representing nearly 24% upside from current levels.