MarketMoodz
Alphabet set to gain from Google Cloud, TPU momentum, Mizuho says
Mizuho reiterates an outperform rating on Alphabet and lifts its 12-month target to $460 from $420, signaling roughly 18% upside. The bank argues Google Cloud and TPU momentum could lift revenue and margins above Street expectations over the next two years.
Key Takeaways
- Mizuho raises Alphabet target to $460 from $420, ~18% upside
- Google Cloud revenue growth forecast: 70% YoY by end-2026 (vs. Street 58%)
- 53 of 61 analysts covering Alphabet have buy/strong buy ratings per LSEG
- TPUs and hardware could generate margins at least equal to Alphabet’s traditional compute rental business
- Alphabet shares up more than 29% in the past month
People Involved
- Lloyd WalmsleyAnalyst, Mizuho Financial Group
Entities Involved
- Alphabet Inc. (GOOGL)Parent company of Google and the cloud/hardware initiatives
- Google CloudCloud computing unit within Alphabet
- Mizuho Financial GroupInvestment bank behind the note and target price
MarketMoodz Analysis
If Google Cloud and TPU momentum translates into faster revenue growth and margin expansion, Alphabet could outpace current Street expectations and lift the stock's risk-reward balance. The note’s implied 70% Cloud growth by end-2026 suggests a material shift in growth drivers beyond advertising.
Historically, Alphabet’s valuation has depended heavily on ad sales, but cloud and hardware ambitions are increasingly in focus as AI demand and capex cycles accelerate. A strong cloud backbone with higher margins could push operating income higher and support a multiple expansion even as competition intensifies.
What to watch next: monitor Google Cloud backlog data, TPU demand and pricing, and any disclosures on cloud profitability or capex cadence. Also verify LSEG ratings as sentiment evolves and compare against the latest Street estimates and disclosures from Alphabet.
Source: Original Article