Alphabet (GOOGL), the parent company of Google, is seeing rising bullish sentiment on Wall Street as analysts highlight the value of its custom AI hardware. The company has started selling its custom AI chips, known as TPUs, to cloud customers instead of using them only internally. Top Citizens analyst Andrew Boone raised his target to a street-high $515 from $385, saying it is still “early” for investors to fully recognize the upside from Google’s AI shift. The new price target implies about 34% upside from current levels.
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Notably, GOOGL stock has rallied more than 23% year-to-date and 133% over the past year, driven by the strength in the company’s cloud business, demand for its TPU (tensor processing unit) chips, and strategic AI deals.
TPU Opportunity Gains Attention
The biggest takeaway for investors is that Google has started selling its TPUs to cloud customers instead of using them only for its own services. This allows the company to earn from AI beyond its own data centers, which opens up a much larger market opportunity.
In addition, Boone pointed out that Google has an advantage because it controls both its hardware and software. This helps lower costs and makes it easier to scale AI across its products compared to competitors.
Looking ahead, he expects more momentum from the upcoming Google I/O event, where a new advanced AI model could be announced. This could also support continued growth in Google Cloud.
AI and Margin Gains Could Drive Further Upside
At the same time, Boone believes current estimates may not fully capture future revenue from TPU sales, especially beyond 2027. With Google’s search business already valued at roughly $225 billion, he believes AI is expected to improve every part of Google’s platform, making it more profitable than ever.
While some might worry about the stock’s recent gains, Citizens believes investors should keep buying. The firm says Google is entering a period of “rearchitected” costs that could lead to much higher profit margins through 2027.
Is GOOGL Stock a Good Buy?
Wall Street has a Strong Buy consensus rating on Alphabet stock based on 28 Buys and five Holds. The average GOOGL stock price target of $421.70 indicates about 10% upside potential.
