Wells Fargo analyst Ken Gawrelski has maintained an Overweight rating on Alphabet and raised the price target to $438, up from the previous $416. The revised target reflects increased confidence in the company's performance potential.

Rating and Target Details

The research note highlights the firm's continued positive stance on Alphabet's stock. The adjustment in the price objective suggests an expected upside based on the current valuation.

Alphabet trades on the NASDAQ under the ticker GOOGL.

Alphabet Inc is scheduled to report its second-quarter earnings after the market close on Wednesday, with analysts anticipating revenue of $113.6 billion and earnings per share (EPS) of $2.87. The estimates represent an increase from the prior year's revenue of $96.4 billion and EPS of $2.31. While investors focus on AI spending, cloud growth, and advertising, a critical question remains whether Google can make artificial intelligence cheaper to run through hardware innovation. This focus on efficiency contrasts with views from BlackRock Inc CEO Larry Fink, who argues the global AI race will be decided by power capacity rather than just chips or models.

Google's AI Bet Isn't Just About Faster Chips

According to reports, Alphabet is developing a new server chip, internally called Frozen v2, designed specifically to run Gemini models more efficiently. Unlike conventional AI accelerators that rely primarily on software to run increasingly large models, Frozen v2 aims to integrate portions of the model into the hardware itself. Google engineers believe the new chip could deliver between six and 10 times more tokens per unit of power than the company’s latest Tensor Processing Units (TPUs) by embedding portions of Gemini’s architecture directly into the silicon.

The AI Race May Become A Power Race

Running AI models is quickly becoming one of the largest operating expenses for hyperscalers. Fink pointed to China’s rapid expansion of nuclear and solar generation, saying the country is positioning itself to meet the enormous electricity demands of artificial intelligence. If electricity becomes the industry’s primary bottleneck, simply deploying more GPUs may no longer be enough. Instead of solving the problem by generating more power, Google appears to be exploring how to accomplish more AI work with each watt of electricity consumed.

Analyst Ratings and Price Targets

Ahead of the earnings release, analysts have adjusted their price targets, reflecting a mix of optimism and caution regarding the company's AI investments and growth trajectory. Guggenheim analyst Michael Morris maintains a Buy rating with a price target of $450, suggesting that recent competitive noise creates an attractive entry point for the full-stack AI leader.

| Firm | Rating | Price Target Action | |---:|:---| | BMO Capital | Outperform | Raised from $435 to $455 | | Wedbush | Outperform | Assumed coverage, no target | | UBS | Neutral | Lowered from $410 to $400 | | KeyBanc | Overweight | Raised from $425 to $445 | | Wells Fargo | Overweight | Lowered from $435 to $416 |

Key Items to Watch

Investors will focus heavily on updates regarding Alphabet's Gemini AI initiatives and the potential impact of custom silicon on margins. Freedom Capital Markets Chief Market Strategist Jay Woods noted that delays with Gemini raise questions about whether the company is losing its edge to rivals like Anthropic and OpenAI. Woods emphasized that Wall Street wants evidence that massive spending on chips, data centers, and Gemini development is driving growth rather than simply increasing expenses. Services and Cloud revenue are critical metrics to monitor, having grown 16% and 63% year-over-year, respectively, in the first quarter.