By Emily Bary
Alphabet’s stock has already doubled off its 2025 lows, but an analyst is still upbeat about Google’s resilience in search and its growing presence in semiconductors
Alphabet’s cloud business can dramatically outgrow Amazon’s through 2027, according to a Loop Capital analyst.
The hottest “Magnificent Seven” stock of the year could keep climbing, according to an analyst who just turned bullish on Alphabet shares.
Rob Sanderson of Loop Capital said Alphabet (GOOG) (GOOGL) has efficiently climbed the “wall of worry,” putting to bed fears that dogged the stock earlier this year. Sanderson is admittedly late to the game, with Alphabet’s stock roughly doubling off its 2025 lows and leading the Magnificent Seven group of megacap tech names with its 51% year-to-date gain, but he sees plenty of catalysts that could drive further price appreciation.
For one, the Google search business looks “as healthy as ever” – despite worries earlier this year about the threat posed by OpenAI’s ChatGPT.
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“Continued strength is disproving concerns (or at least postponing concerns) that AI chatbots are encroaching on Google as a primary starting point for the information seeking journey of users,” Sanderson wrote. “Strength is impressive considering Amazon pulled out of search ads in July and outsized growth in insurance as a category was expected to normalize” against tougher comparisons.
And Alphabet certainly isn’t sitting still when it comes to its own artificial-intelligence efforts, including with its Gemini large language model. “Through the year, Gemini has closed or overtaken leading modelbenchmarks in key areas and the company is now flexing its distribution muscle,” Sanderson noted.
Now excitement is building for Gemini 3.0, the next iteration of the model, which launched Tuesday.
See more: Google’s Gemini 3 is finally here. Can it power Alphabet’s stock even higher?
That said, there are risks to Alphabet’s moves in AI. Even its CEO sees some “irrationality” in the current AI mania. “I think no company is going to be immune, including us,” he told BBC when asked how Google would fare if the AI bubble burst.
So far, AI has been a boon to Alphabet’s cloud business, which is another element of the Google story that excites Sanderson. He thinks that unit alone is worth more than $1 trillion to Google. The business “has been on a big upswing,” with its backlog more than doubling over a five-quarter period, he noted.
Google Cloud should be able to “meaningfully outgrow” Amazon’s (AMZN) AWS cloud business through 2027, according to Sanderson, though he acknowledged that Alphabet’s performance is coming off a revenue base less than half the size of its major rival’s.
He is also upbeat about Alphabet’s custom chips known as tensor processing units, which he sees “becoming a big deal” for the company and within the industry, while helping Google stand out to cloud customers.
“Impressive price-performance benchmarks are making the Google TPU a differentiated driver for the cloud business as the company makes this internal advantage on compute economics available to third-party customers,” Sanderson wrote.
He moved to a buy rating from a prior hold stance on Alphabet’s stock. Sanderson’s $320 target price is 12% above current levels.
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-Emily Bary
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11-18-25 1947ET
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