Alphabet Stock 'Should Trade At A Premium': 5 Analysts Highlight AI, CapEx, How Much YouTube Could Be Worth

Alphabet Inc GOOGGOOGL analysts share thoughts about the company's latest CapEx estimate and provide sum-of-the-parts valuations of how much YouTube could be worth after the company reported a mixed fourth-quarter.

The Alphabet Analysts: Morgan Stanley analyst Brian Nowak maintained an Overweight rating and lowered the price target from $215 to $210.

Needham analyst Laura Martin maintained a Buy rating with a $225 price target.

JPMorgan analyst Doug Anmuth maintained an Overweight rating and lowered the price target from $232 to $220.

BofA Securities analyst Justin Post reiterated a Buy rating with a $225 price target.

Goldman Sachs analyst Eric Sheridan reiterated a Buy rating and raised the price target from $215 to $220.

Morgan Stanley on GOOG: Higher spending to boost the company's GenAI could put a bigger emphasis on shipping new products and keeping return on invested capital in place, Nowak said in a new investor note.

The analyst said until Alphabet ships more GenAI-enabled products, investors will debate the uncertainties about incremental ROIC.

"In our view shipping products and proving that they will indeed provide incremental multi-year revenue and cash flow growth remains the proof point that GOOGL needs to show in order to break out of this 16-20x PE multiple,” Nowak said.

Nowak said Alphabet's comments signal free to use scaled agentic products could be farther out than expected.

Needham on GOOG: Google Search and YouTube were highlights in the quarterly results for Martin, who said the company's cloud platform is "capacity-constrained."

The analyst said CapEx guidance of $75 billion in 2025 is up 43% year-over-year and 25% above her estimate of $60 billion.

"We fear that this execution misstep allows competitors to take market share away from GCP in the LLM land-grab," Martin said.

Martin highlighted the strength of the company's ownership of YouTube, which saw advertising revenue up 14% year-over-year in the quarter. Martin also said YouTube has been the number-one streaming platform in the U.S. for the past two years.

Based on a sum-of-the-parts valuation, Martin estimates that YouTube is worth $666 billion, or around $54 per share if Alphabet spins off or separates the highly coveted asset. The valuation comes from several metrics including comparing the company's advertising revenue and subscription revenue to streaming company Netflix.

The analyst said Alphabet is worth more in pieces than together and welcomes regulators trying to break up the company.

Martin sees Alphabet with a strong long-term position based on digital advertising dominance, YouTube strength and GenAI.

"We believe that GOOGL's primary upside valuation driver over the next three to five years will be its proprietary large language models."

JPMorgan on GOOG: Capex guidance, cloud results and higher costs likely led to Alphabet stock selling off after earnings, Anmuth said in a new investor note.

The analyst said advertising growth was solid for search and YouTube, which were the highlights in the quarter.

"The bigger question is whether Google can continue to expand margins in 2025 given likely slower revenue growth and accelerating depreciation," Anmuth said.

The analyst said Alphabet stock sells off while Meta Platforms gets celebrated for higher CapEx guidance likely due to investors and analysts being able to see the return on AI investments clearer from Meta.

"We expect some near-term pressure as the Street adjusts to the heavier spending outlook, but we remain encouraged by Google's AI innovations & solid advertising growth."

Bank of America on GOOG: Solid Google search results and investments to help boost AI and cloud demand are positives shared by Post in a new investor note.

"We remain constructive on growing AI benefits for advertising and Cloud business," Post said.

The analyst said Alphabet management emphasized growing Search volumes.

"We are encouraged to see another quarter of strong Search growth and think Street could be underestimating AI overview benefits for Search monetization in 2025."

The analyst said Alphabet is well-positioned with leading AI technology that can apply across its search, YouTube and Cloud businesses.

"We believe that Alphabet should trade at a premium to a media peer group given technology leadership, high margins, and strong cash flow generation for buybacks."

Goldman Sachs on GOOG: Sheridan said Alphabet's quarterly results were "solid" and the company now needs to "maintain investment levels" in a new note.

The analyst said search and YouTube were strong in the quarter.

"Google Cloud growth came in lighter than expected with management citing supply constraints limiting ability to serve strong AI-related demand," Sheridan said.

The analyst said the higher CapEx will prove to be the key debate for investors as they expect to see revenue growth to offset the higher costs.

"We continue to view Alphabet as well-positioned against both the current and potential future computing landscapes."

GOOG Price Action: Alphabet stock is down 7.39% to $192.37 on Wednesday versus a 52-week trading range of $131.55 to $208.70. Alphabet stock is up 1.1% year-to-date in 2025 and up 33% over the last year.

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