Alphabet (GOOGL) Drops 7% Amid Legal Setback — Wells Fargo Projects 41% Rally Ahead

Key Highlights

• Google’s parent company saw shares decline 3.4% on Thursday, settling at $280.92 — marking the weakest closing price since mid-November 2025 following a jury verdict in an addiction-related case
• Shares extended losses on Friday with an additional 1.2% drop to $277.70, bringing the weekly decline beyond 7%
• Financial services firm Wells Fargo boosted its valuation target for Alphabet from $387 to $397 while keeping its Overweight stance
• The firm’s optimism stems from tensor processing unit chip deals with Anthropic and the massive $32 billion Wiz cybersecurity acquisition
• Wells Fargo’s Ken Gawrelski stated the tech giant “has all the pieces necessary to be an AI winner”

Google’s parent company experienced a significant Thursday downturn of 3.4%, with shares closing at $280.92 — representing the weakest finish since November 14, 2025, according to Dow Jones Market Data. The descent continued into Friday with an additional 1.2% slide to $277.70.

Alphabet Inc., GOOGL

The Thursday selloff followed a courtroom decision where a jury found Google’s YouTube platform and Meta liable in litigation filed by a plaintiff alleging the platforms engineered addictive features. The jury awarded $6 million in damages. Meta’s stock plummeted nearly 8% Thursday and continued downward with a 1.5% Friday decline to $539.20.

The week’s trading activity positions Alphabet for a weekly retreat exceeding 7%.

Yet amid the downturn, Wells Fargo issued an optimistic assessment Friday morning. The investment bank elevated its valuation target for Alphabet to $397 from the previous $387, maintaining its Overweight designation. This revised target suggests potential appreciation of 41% from Thursday’s closing level.

Investment Bank Highlights Emerging Revenue Opportunities

The Wells Fargo team highlighted two strategic initiatives. First, Google’s decision to license its proprietary tensor processing unit technology — TPUs — to artificial intelligence company Anthropic. Second, Alphabet’s substantial $32 billion all-cash purchase of Wiz, a cloud security provider, which finalized on March 11.

Wells Fargo projects the TPU licensing arrangement will contribute 4% to Google Cloud Platform revenues in 2026, expanding to 7% by 2027. From an operating income perspective, the bank anticipates a 6% enhancement in 2026 and 14% in 2027. The Wiz transaction is expected to deliver substantial additional contributions.

Financial Firm: Google Has Complete Arsenal for AI Dominance

This represents a bold endorsement considering the competitive challenges Google Search has encountered from artificial intelligence-driven alternatives throughout the past year.

Alphabet’s equity is currently trading more than 17% below its 52-week peak. According to Wells Fargo’s analysis, the present valuation represents a considerable markdown relative to the bank’s assessment of intrinsic value.

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