Alphabet Draws Fresh AI Optimism and Big-Name Buyers

January 1, 2026 at 19:13 UTC

4 min read

Alphabet stock chart rising with AI graphics and investor interest, highlighting AI-driven growth optimism

Key Points

Citizens analyst lifts Alphabet price target to $385, implying ~22% upside
Berkshire trims Apple but joins other billionaires in buying Alphabet
Alphabet weaves Gemini AI into Search, Android and cloud offerings
Valuation debates intensify as AI capex and regulation loom over margins

New Year opens with bullish call on Alphabet’s AI search push

Alphabet is starting 2026 with a higher Wall Street bar as Citizens Financial Group analyst Andrew Boone raised his price target on the company to $385 from $340, according to a Barron’s report. The new target on Alphabet’s non‑voting Class C shares (GOOG) implies about 22% upside from the Dec. 31 close of $313.80 and follows a roughly 65% gain in 2025 that was driven by an AI‑led rally. Boone cited the rollout of AI Mode and AI Overviews in Google Search and the release of the Gemini 3 model, describing AI search as a near‑term tailwind for query growth even as rival chatbots such as ChatGPT and Perplexity compete for users. The call lands during a U.S. market holiday, with trading set to resume Friday, leaving investors to digest analyst commentary and macro headlines in the absence of fresh price discovery.

AI features sharpen focus on Alphabet’s earnings and spending

The upgraded target underscores a broader debate over whether Alphabet’s AI enhancements will strengthen or erode its core search and advertising franchise. Market commentary cited in multiple reports notes that new AI products, including Gemini and other launches, helped re‑accelerate Alphabet’s business in 2025, boosting search monetization and investor sentiment. Analysts say the key question for 2026 is whether AI features can generate incremental revenue while covering the rising cost of data‑center and chip investments that support them. Heavy AI infrastructure capital expenditure is flagged as a potential drag on near‑term margins and free cash flow, while ongoing regulatory scrutiny, including Department of Justice actions, remains an overhang. Alphabet is expected to report quarterly results on Feb. 3, with investors focused on Search advertising trends, YouTube and Google Cloud performance, and AI‑related capital spending.

Berkshire trims Apple and turns to Alphabet amid billionaire inflows

Alongside the analyst optimism, Alphabet is attracting high‑profile institutional interest. A recent portfolio review shows Berkshire Hathaway has been a net seller of Apple stock since late 2023, reducing its Apple position by roughly 73% through the third quarter of 2025. Over the same period, Berkshire and other prominent investors, including Stanley Druckenmiller, Israel Englander, Ken Griffin and Philippe Laffont, added to Alphabet positions during the third quarter. The shift comes after Alphabet spent several years building out its AI roadmap while attention centered on other AI leaders such as Nvidia and Palantir Technologies. Alphabet has now integrated its Gemini large language model into core products, from an overhauled Google Search landing page to Android devices, and has invested in custom Tensor Processing Units for its cloud platform. The company also announced a $4.7 billion acquisition of Intersect, a provider of clean‑energy power sources for data centers, as part of its long‑term infrastructure planning.

Valuation, ownership trends and intrinsic value estimates

Alphabet’s stock has been one of the most‑upgraded among the so‑called Magnificent Seven, with numerous brokerages reiterating or raising “buy” and “outperform” ratings and lifting price targets into the $300s. MarketBeat data show four analysts with Strong Buy ratings, 41 with Buy and six with Hold, for an average rating of “Moderate Buy” and a consensus target around $317.76. Class A shares (GOOGL) recently opened at $313.00, giving Alphabet a market capitalization of about $3.78 trillion, a price‑to‑earnings ratio of 30.87 and a PEG ratio of 1.81. Institutional investors own roughly 40.03% of the stock, while insiders hold about 11.64%. Insider activity has included sales by CEO Sundar Pichai and other executives in recent months. A separate discounted earnings analysis from GuruFocus estimates Alphabet’s intrinsic value at $270.81 per share, characterizing the stock as fair valued but modestly overvalued relative to its current trading price, while a discounted free cash flow model produces a lower intrinsic value of $187.72.

Key Takeaways

Alphabet’s AI rollout, centered on Gemini and AI‑enhanced search, is now a primary driver of both bullish analyst targets and investor scrutiny of future profitability.
Capital rotation by Berkshire Hathaway and other billionaire investors away from prior tech favorites and into Alphabet highlights a shifting view of where durable AI value may reside.
Valuation metrics and intrinsic value models show Alphabet trading above some earnings and cash‑flow based estimates, reinforcing a split between growth expectations and near‑term fundamentals.