Wall Street’s Renewed Confidence in Alphabet’s AI Strategy

The first full trading week of 2026 concluded on a high note for Alphabet Inc., with its shares closing near a 52-week peak at $328.57 on Friday. This upward momentum is largely attributed to a surge of positive sentiment from financial analysts, signaling that the market is increasingly confident the company's substantial artificial intelligence investments are beginning to yield returns.

A significant shift in narrative is underpinning the rally. Major institutional investors are no longer viewing Alphabet's heavy capital expenditures on AI infrastructure throughout 2025 as a financial burden. Instead, these outlays are now being recognized as strategic investments that are demonstrating tangible, measurable returns. This reassessment is a key driver behind the recent stock performance.

Four Major Banks Raise Targets

In a concentrated wave of optimism, four prominent investment firms have upgraded their price targets for Alphabet within a short timeframe:

• Mizuho increased its target to $365 from $325, citing robust growth in Google Cloud and the successful monetization of its Gemini AI infrastructure. The firm maintains an "Outperform" rating.
• Scotiabank set a target of $375.
• Cantor Fitzgerald established a $370 target alongside a "Buy" recommendation.
• Pivotal Research issued the most aggressive forecast with a $400 price target.

The Battle for Global Ranking

With a market capitalization of approximately $3.97 trillion, Alphabet is engaged in a tight race with Apple for the position of the world's second-most valuable company. Alphabet briefly overtook its rival this week, an indication that the market currently places a higher premium on AI-driven growth potential than on Apple's hardware cycle.

Should investors sell immediately? Or is it worth buying Alphabet?

Concerns that generative AI tools like Gemini might cannibalize Alphabet's core Search business appear to be fading as the technology is integrated deeper into the Google ecosystem. Current data suggests these AI enhancements are actually strengthening user engagement and unlocking new revenue streams within Google Workspace and Cloud services.

Forthcoming Catalysts: Earnings and Regulatory Decision

Investors are looking ahead to two critical events in February that will provide further direction.

First, the company's quarterly results, scheduled for release on February 3, will be scrutinized for validation of the heightened market expectations. Analysts will focus intently on operating margins and the profitability trajectory of the cloud division.

Preceding that, a significant regulatory decision from the European Union is expected on February 10 regarding Alphabet's proposed $32 billion acquisition of cybersecurity firm Wiz. Approval would substantially bolster Google Cloud's competitive stance against Microsoft Azure. A blocked deal, however, could force the pursuit of alternative strategic paths.