Alphabet (NASDAQ:GOOG) continues to dazzle, delivering its eleventh-consecutive quarter of double digit revenue growth. And it’s not just sales that have been increasing, as profits are also gaining steam.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Indeed, the company’s most recent quarterly report provided further evidence that Alphabet is clicking, and that its massive AI investments are paying off. Revenues grew by 22% year-over-year (19% in constant currency) to reach a record $109.9 billion, while operating income increased 30% to $39.7 billion.
Of course, investment decisions are focused on future performance, and here too Alphabet seems primed to deliver. The company’s Google Cloud backlog exploded to $462 billion at the end of the quarter, almost doubling sequentially.
So, it’s no big surprise that GOOG’s share price has been jumping since coming out of a market-wide lull in the month of March. Long-time bull Daniel Jones is taking a victory lap, noting that he’s gained over 200% since issuing a Buy call in June 2023.
However, that doesn’t mean GOOG has become a “set it and forget it” type of investment.
“Alphabet’s strong growth is set to continue, but a downgrade might not be far off,” states the investor.
Jones readily appreciates the company’s strong performance over the past few years. He’s especially appreciative of Google Cloud, which he deems “the most impressive part of the company.”
The segment delivered $20.03 billion in revenue in Q1 2026, a large jump from $12.26 billion in the previous year. The overall market is growing by leaps and bounds, notes Jones, who cites a Goldman Sachs report that annual revenues could hit $2 trillion by the end of the decade.
“Even though this will not be the only part of the company to expand, it will be the primary driver of value creation moving forward,” adds Jones.
And yet, the investor also cautions that GOOG’s valuation is becoming “quite lofty.” For that reason, Jones would consider downgrading to a Hold if the share price were to inch up by another 10%.
“Truth be told, I believe that the easy money has already been made when it comes to Alphabet,” explains Jones, who nevertheless sees more upside ahead. The investor is sticking with a Buy rating, for now. (To watch Jones’ track record, click here)
Nor is Wall Street ready to ease off the gas pedal. With 11 Buys and 1 Hold, GOOG enjoys a Strong Buy consensus rating. Its 12-month average price target of $427.00 points to an upside of ~11%. (See GOOG stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.