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Alphabet heads into Q2 with bullish Bank of America outlook
Bank of America set a $440 price target for Alphabet, implying about 19% upside, and pointed to expanding cloud margins alongside a sharp rise in capital spending that pressured free cash flow.
Ahead of Alphabet’s next earnings report on July 22, Bank of America took a bullish stance on the stock, assigning Alphabet a BUY rating and a $440 price target. The target implies 19.06% upside from the $369.68 share price at the time of the note.
The bank highlighted Google Cloud as a key driver, citing 63% growth compared with Microsoft’s Azure growth of 40%, along with cloud backlog nearly doubling to $462 billion. It also pointed to improving profitability, with Google Cloud operating margin rising from 17.8% to 32.9% year over year.
Bank of America’s setup leans on cloud acceleration and AI monetization, including GenAI-related product revenue growth of nearly 800%, and it also cited Waymo momentum, with the business crossing 500,000 fully autonomous rides per week. The firm said prediction markets were assigning a very high probability of another earnings beat.
The note also flagged a counterweight from rising investment intensity, saying Q1 CapEx rose more than 100% to $36 billion and free cash flow fell 47%. It described the bull case as cloud and AI momentum offsetting that pressure, while the bear case centers on how long higher spending weighs on cash generation.