Alphabet’s (NASDAQ:GOOGL) 2025 journey is one defined by a big shift in sentiment. While the year began with the search giant seemingly under threat from AI’s unstoppable rise, it is seeing out 2025 viewed as one of AI’s biggest winners.
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But for Guggenheim analyst Michael Morris, heading into 2026, it’s business as usual, with a long-held thesis that remains unchanged. That is, the largest companies under his coverage are best positioned to generate “outsized growth” and deliver strong returns for investors.
And Alphabet is prominent among these names. “We expect Alphabet to outperform consensus estimates and see additional relative multiple expansion on further investor confidence that artificial intelligence-driven changes in the business, advertising and consumer marketplaces are expansion opportunities,” the 5-star analyst went on to say.
Morris’ growing confidence is down to three key developments. For one, backlog acceleration in the Cloud business driven by surging enterprise AI demand points to “sustained revenue growth.” As of Q3, the company’s remaining performance obligations reached $157.7 billion, up 69% from $93.2 billion at the end of 2024, with management forecasting that slightly more than half of this backlog will be recognized over the next 24 months, maintaining a pace consistent with previous periods.
The reported backlog is underpinned by “several fundamental drivers.” In the first nine months of 2025, Google Cloud secured more billion-dollar deals than in the previous two years combined, and the number of deals exceeding $250 million doubled compared with the same period last year. Meanwhile, new GCP customer additions rose by 34% YoY in Q3, and more than 70% of existing Google Cloud customers are now making use of AI products. Additionally, nine of the top ten AI labs have selected Google Cloud, with Anthropic recently committing to access up to one million TPUs.
Secondly, Morris points to YouTube’s “sustained dominance in streaming viewership with improving monetization dynamics.” Morris’ optimistic outlook for YouTube is supported by proprietary analysis of Nielsen Gauge data, which shows YouTube as the biggest share gainer in streaming, with viewership growth consistently outpacing the overall category. “Critically,” Morris added, “YouTube’s monetization of this viewership is accelerating.”
Lastly, “rapidly increasing adoption” of Gemini reinforces its position as a leading AI platform, with Morris’ confidence boosted by the feedback for Gemini 3.0 and impressive usage trends. Since its November release, Gemini 3.0 has been met with an “overwhelmingly positive reception,” with total monthly active users now rising to 650 million, up from 350 million in March.
Accordingly, Morris maintained a Buy rating on GOOGL shares and raised his price target from $330 to $375. Should the figure be met, investors will be pocketing returns of 18% a year from now. (To watch Morris’s track record, click here)
30 other analysts back GOOGL’s chances while 7 additional Holds can’t detract from a Strong Buy consensus rating. However, the $314.71 average target suggests the shares are fully valued right now. With this in mind, keep an eye out for further price target hikes or rating downgrades shortly. (See GOOGL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.