Alphabet (GOOGL) Stock Gets Upgrade as Google Cloud Backlog Hits $155B

TLDR

• Guggenheim raises Alphabet price target to $375 from $330, maintaining Buy rating
• Google Cloud backlog reaches $155 billion with 46% quarter-over-quarter growth
• Analyst sees $40 billion in underestimated Cloud revenue potential
• YouTube monetization improving while Gemini AI adoption accelerates
• Stock up 68% year-to-date as enterprise AI demand strengthens

Alphabet just got a major vote of confidence from Wall Street. Guggenheim analyst Michael Morris lifted his price target to $375, up from $330.

Alphabet Inc., GOOGL

The move comes as Google Cloud delivers impressive growth numbers. The segment finished Q3 with a $155 billion backlog, up 46% from the prior quarter.

Morris thinks investors are missing the bigger picture. He estimates Wall Street is undervaluing Cloud’s revenue potential by around $40 billion based on backlog trends.

Enterprise customers are pouring money into AI infrastructure. Google Cloud is positioned right in the middle of that spending wave.

The stock has already rewarded investors this year. Shares jumped 68% year-to-date and gained 13% in the past month.

AI Investments Drive Multiple Growth Engines

Morris highlighted three key factors supporting his bullish call. Google Cloud leads the list with what he describes as exceptional backlog expansion driven by enterprise AI projects.

YouTube continues dominating streaming viewership. The platform is also improving how it converts those eyeballs into advertising dollars.

Google’s Gemini AI platform completes the growth story. The model is gaining users rapidly and establishing itself as a competitive AI offering.

Reports suggest Meta might tap Google’s Tensor Processing Units for its data centers. That potential hardware partnership could open another revenue stream.

Morris increased his 2026 and 2027 financial forecasts for Alphabet. Most of the upward revisions stem from higher Cloud revenue expectations and margin expansion assumptions.

Market Consensus Shows Mixed Views

Morris’s $375 target sits well above that consensus figure. He believes AI-driven changes in advertising and consumer markets will create expansion opportunities.

TD Cowen kept its Buy rating with a $335 target after Google launched Gemini 3. The upgraded language model now integrates across company products.

Cloud revenue growth has accelerated as enterprise clients adopt AI tools. Google recently rolled out Nano Banana Pro, an enhanced image generation model with better text rendering.

Cloud Backlog Signals Strong Demand

The $155 billion Cloud backlog represents more than just future revenue. It shows enterprise commitment to Google’s AI infrastructure and services.

That 46% sequential growth tells a story about AI spending patterns. Companies are signing long-term deals for cloud capacity and AI capabilities.

Morris expects Alphabet to beat Street estimates heading into 2026. He sees the largest tech companies positioned to deliver outsized growth and investor returns.

The analyst’s revenue and profit upgrades primarily reflect higher Google Cloud segment projections. He also anticipates continued margin improvement as the business scales.

Google Cloud ended Q3 with $155 billion in backlog, growing 46% sequentially on enterprise AI demand.

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