Analyst cites Alphabet’s AI integration and growth potential despite near-term free cash flow concerns.
Phillip Securities upgraded Alphabet to Buy from Accumulate, lowering its price target to $425 from $450. The move follows a 7% post-earnings selloff driven by capital expenditure guidance of $195 billion to $205 billion for 2026 and negative free cash flow.
Alphabet’s cloud revenue grew 82% year over year, and earnings per share beat expectations. However, investor focus shifted to spending concerns, overshadowing strong advertising performance. The upgrade reflects confidence in Alphabet’s vertically integrated AI ecosystem.
Analyst Serena Lim Yi Qi highlighted Alphabet’s control over custom silicon, data centers, and AI models like Gemini as a structural advantage. The firm believes AI momentum justifies the upgrade despite near-term cash flow challenges.