Analysts throughout Wall Road remained largely bullish on Alphabet following its newest earnings beat , however pointed to its excessive capital expenditures and a miss in YouTube promoting as causes for the inventory’s underperformance Thursday morning. Alphabet beat on each the highest and backside traces in its fourth-quarter earnings report launched Wednesday. The Google dad or mum earned $2.82 per share on income of $113.83 billion, whereas analysts polled by LSEG had forecast earnings of $2.63 per share on $111.43 billion in income. Different extremely watched metrics, together with Google Cloud income and site visitors acquisition prices, additionally surpassed expectations. However a sore spot on the report was Alphabet’s YouTube promoting, which — at $11.38 billion — got here in decrease than the estimated $111.43 billion. UBS analyst Stephen Ju chalked up this miss “partially resulting from some model points.” “There have been some misses with YouTube adverts solely rising +9% Y/Y towards more durable comps, whereas [subscriptions, platforms & devices] additionally got here in a contact gentle at +17% Y/Y development,” wrote Bernstein analyst Mark Shmulik. However the greater weak spot highlighted within the report was Alphabet’s increased capital expenditures steering, with the corporate anticipating a pointy improve in synthetic intelligence spending this 12 months. The corporate forecast 2026 capital expenditures, or capex, of between $175 billion to $185 billion. The highest finish of this forecast is greater than double its 2025 spend. On a Wednesday name, Alphabet finance chief Anat Ashkenazi instructed analysts that this cash would go in the direction of investing in AI compute capability for Google DeepMind and to fulfill “vital cloud buyer demand in addition to strategic investments in different bets.” However whereas analysts acknowledge increased capex as a weak spot for Alphabet, they have been additionally extra optimistic about this spend than the inventory’s 3% slide on Thursday morning appeared to recommend. “Whereas capex steering for 2026 was significantly above expectations, we predict the ensuing infrastructure footprint creates a significant moat that few (if any) can replicate, and maybe simply as importantly, one which Alphabet can finest monetize by way of the mixture of its broad service providing (each promoting and subscriptions) in addition to by means of the quickly accelerating Cloud enterprise,” wrote Deutsche Financial institution analyst Benjamin Black. “Importantly, we consider the doubling of capex Y/Y comes from a place of power, with Gemini now at 750M MAUs & exhibiting considerably increased engagement per consumer, Google Cloud income accelerating to +48% w/backlog up 55% Q/Q to $240B, & Search income accelerating to +17% as AI continues to broaden the market,” JPMorgan’s Doug Anmuth added. Bernstein’s Shmulik highlighted the broader software program sell-off and common pessimism towards tech shares as a cause behind Alphabet’s slight underperformance. “Every week in the past this print would have been purchased up, however it’s February, and it appears no income beat is sufficient in an funding cycle that’s simply as prone to be a race to the underside as it’s TAM expansionary whereas wiping out FCF within the course of,” he wrote. In the meantime, UBS’ Ju additionally identified that bears might argue that tight compute provide, alongisde outpacing demand, might cap Alphabet’s near-term cloud development. General, nevertheless, analysts maintained their long-term bullish stances on shares of Alphabet. Here is how a few of Wall Road’s largest outlets reacted. Morgan Stanley: obese, $330 The financial institution’s goal implies a few 1% draw back from Alphabet’s Wednesday closing value of $333.04. “GOOGL’s accelerating multifaceted engagement, monetization and capex funding (for additional AI-driven innovation and development) are the second indicator this earnings season (after META’s spectacular information) that the main scaled corporations with probably the most information, attain and talent/willingness to take a position are seeing the advantages of their flywheels… and that the hole between them and the smaller gamers throughout tech house is prone to widen sooner than anticipated even 35 days in the past.” Bernstein: market-perform, $345 Bernstein’s forecast, up from $335, gives upside of 4%. “If buyers’ chief grievance earlier within the AI LLM/search wars was that Google wasn’t spending sufficient to maintain up, they immediately discover themselves reversing course and questioning if Google is now spending an excessive amount of with a 2026 CapEx information of $175-185B almost 2xing funding ranges Y/Y over 12 months. And if there was any lingering doubt that administration was being conservative, it definitely appears like their largest fear nowadays is how rapidly they’ll spin up extra capability. With EPS/FCF firmly range-bound in an escalating funding cycle, the hope is that the ROIC holds up in 2027+ the place questions round income development sturdiness emerge.” UBS: impartial, $348 UBS’ goal corresponds to upside of round 4%. “That stated as Google’s CapEx information was $55B forward of our projection for 2026, complete prices improve ~$16B and ~$24B to lead to a extra muted influence to EPS (2027E EPS rises by 1%), which can disappoint buyers as GOOGL shares are close to peak a number of ranges. We keep our Impartial score on balanced danger reward, notably because the Road begins to low cost ChatGPT’s approaching ramp in advert monetization.” Barclays: obese, $360 Barclays’ goal, up from $315, requires 8% upside going ahead. “GOOGL AI story is cranking on full flex-mode with 48% Cloud development and an enormous bounce in backlog. In the meantime Search accelerated and is driving Companies margins up. The AI progress comes at a value, with Deepmind (corp) prices exploding alongside the capex.” Financial institution of America: purchase, $370 Financial institution of America’s forecast is 11% above Alphabet’s present valuation. “Quarter strengthen thesis that: 1) Google search exercise will speed up from new AI use circumstances (not shedding queries to OpenAI), 2) AI can structurally drive increased Search monetization, 3) Gemini LLM and TPUs are Cloud aggressive benefits, and 4) Cloud capex is excessive ROI, & extra capability will speed up Cloud development … Key catalysts forward: Shopper agentic launch, Advertisements in Gemini app launch, Cloud Subsequent Conf. (Apr 22).” Deutsche Financial institution: purchase, $390 Deutsche Financial institution’s value goal, up from $370, represents upside of 17%. “The set-up for Alphabet was not straightforward, with the inventory rallying ~20% since 3Q’s outcomes. Towards that backdrop, the corporate reported nearly no hair on income and OI outcomes, with robust development throughout all main segments – consolidated revenues grew to $114bn, +18% y/y (+17% FXN), outperforming the road by ~2%.” Citi: purchase, $390 Citi hiked its value goal from $350. “That stated, with 2026E CapEx steering of $175B – $185B materially increased than Road expectations considerably impacting FCF, we acknowledge the priority round investments and ROI. However given clear AI demand alerts, we consider Google must be investing in product and in assuaging capability challenges.” JPMorgan: obese, $395 The agency’s forecast, up from $385, implies Alphabet inventory might rise 19% from right here. “Whereas some may say the monetary profile and outsized spending shifts Google nearer to Meta, we consider we’re seeing clear returns on Google’s investments throughout Gemini, Cloud, and Search, and Google differentiates with very significant multi-year backlog.” Goldman Sachs: purchase, $400 Goldman Sachs’ goal, raised from $375, equates to twenty% upside. “Alphabet has climbed a steep wall of fear previously 12 months across the AI theme and we do not see any causes to suspect a pause or step again by way of its working proof factors that might change investor notion over the close to time period. We proceed to anticipate Alphabet can efficiently navigate the present multi-year evolution of its core Search product by leveraging its present strengths (present consumer base; main product innovation, which is accelerating in tempo; technical infrastructure footprint and price leverage vs. rivals; and so forth.).”