TD Cowen reiterates Buy on Alphabet stock, cites AI growth By Investing.com

TD Cowen reiterated a Buy on Alphabet and raised its price target to $375 from $365, citing continued cloud growth, strong search performance, and accelerating AI adoption after Cloud Next product launches. Google unveiled Gemini Enterprise Agent Platform, Agentic Data Cloud, two next-generation TPU chips, and a Mac desktop Gemini app, while also facing an EU proposal to open search data access to third parties under the Digital Markets Act. The news is supportive for Alphabet and the AI/semiconductor ecosystem, though the regulatory overhang tempers the overall impact.

Analysis

The market is still underpricing how much of Alphabet’s next leg is a supply-chain story, not just a software story. If agentic workloads scale as expected, the bottleneck shifts from model quality to inference cost, orchestration, and enterprise integration; that is structurally supportive for TPU utilization and for any adjacent vendor that helps Google monetize custom silicon faster than hyperscalers dependent on merchant GPUs. The second-order winner is the cloud stack around AI deployment and inference efficiency, while the biggest loser is any AI infrastructure exposure priced on perpetual GPU scarcity and unconstrained capex growth.

The near-term catalyst path is cleaner than the long-term one: product launches can drive cloud bookings and enterprise pilots over the next 1-2 quarters, but the real monetization proof will show up in cloud margin expansion and higher AI attach rates by year-end. That said, the market may be extrapolating too quickly from product breadth to durable revenue acceleration; enterprise AI adoption tends to be lumpy, with security, governance, and workflow redesign delaying conversion. The risk is that investors pay up for strategic optionality before the company demonstrates that agentic demand changes search monetization or cloud economics in a measurable way.

Regulatory overhang is the main asymmetry: anything that forces broader data access or weakens Google’s control over search/query traffic could cap the multiple even if cloud accelerates. The contrarian view is that the stock’s move may be too dependent on AI narrative momentum while consensus still treats search as the cash engine; if AI cannibalizes query behavior faster than it lifts monetization, revenue mix can become a headwind before it becomes a catalyst. In other words, the bull case is real, but the debate should center on margin durability and distribution control, not just model announcements.

Key Decisions for Investors

• Stay long GOOG on a 3-6 month horizon, but prefer call spreads over outright equity: buy 1Q26 call spreads to express upside from cloud/AI conversion while limiting downside if search monetization stalls.
• Pair trade: long GOOG / short a basket of higher-multiple AI infrastructure names with weaker software monetization linkage. The edge is a shift toward in-house silicon and enterprise workflow capture over the next 6-12 months.
• Avoid chasing MRVL here; the reported custom-chip discussions are positive but likely lower-margin and less strategically valuable than the market may assume. Use any pop to fade into strength unless confirmed design-win economics emerge.
• For event risk, reduce GOOG exposure into the EU decision window if headline sensitivity matters. A negative regulatory surprise could compress multiple expansion even if fundamentals remain intact.
• Watch for a cloud margin inflection in the next two earnings prints; if AI revenue grows without margin dilution, add to GOOG, as that would validate the thesis that agentic workloads are monetizing faster than expected.