Shares of tech giant Alphabet (GOOGL) have risen 27% year-to-date, driven by the strength in its Google Cloud business, integration of artificial intelligence (AI) in Search, and the growing adoption of the company’s TPU (Tensor Processing Unit) AI chips. Top Mizuho analyst Lloyd Walmsley sees further upside potential in GOOGL stock. He raised his price target for GOOGL stock to $460 from $420 and reiterated a Buy rating, saying “We believe consensus estimates continue to significantly under-model Google Cloud revenue and operating income potential over the next two years.”
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Alphabet recently reported market-beating first-quarter earnings.
Mizuho Analyst Is Bullish on Google Cloud’s Prospects
Walmsley’s analysis of the latest cloud backlog data and hardware sales estimates from Mizuho’s supply chain team indicate Cloud segment revenue and operating income projections that are notably ahead of the Street’s estimates. He highlighted that in Q1 2026, Google Cloud backlog surged 90% quarter-over-quarter to about $462 billion, with an estimated $61 billion expected to be achieved via TPU sales through 2027.
Based on his analysis and the solid backlog, Walmsley now expects Google Cloud revenue growth of 70% in 2026 and 59% in 2027, compared to the Street’s expectations of 58% and 47%, respectively. While the company has not disclosed the revenue recognition method or margin profile of chip sales, the 5-star analyst believes that hardware sales can deliver margins at least comparable to the company’s traditional cloud compute rental business.
Overall, Walmsley increased his 2026 and 2027 revenue and operating income estimates for the Google Cloud segment and raised his earnings per share (EPS) estimate for 2026 and 2027 to $14.31 and $15.12, respectively, ahead of consensus estimates of $13.50 and $14.43. The analyst added that his revised price target is based on a P/E multiple of 30x 2027 GAAP EPS of about $15. He emphasized that this P/E multiple is above GOOGL’s range for the past 3-years, reflecting his view that Alphabet has “shifted from AI Loser to AI Winner and deserves a premium.”
Interestingly, Walmsley ranks No. 169 among more than 12,200 analysts tracked on TipRanks. He has a success rate of 63%, with an average return per rating of 24.9% over a one-year period.
Is GOOGL Stock a Buy, Sell, or Hold?
Based on 28 Buys and five Holds, Wall Street has a Strong Buy consensus rating on Alphabet stock. The average GOOGL stock price target of $426.44 indicates 7.5% upside potential.
