Alphabet (GOOGL, GOOG) shares fell nearly 8% Thursday morning after multiple brokerages lowered their price targets following the company's second-quarter earnings. The decline occurred despite Alphabet reporting better-than-expected earnings and revenue, driven by strong Google Cloud performance, a jump in Gemini users and unrealized securities gains. The company's higher capital expenditure plans prompted analysts to reset their valuation targets while largely maintaining bullish ratings. At the time of writing on Thursday afternoon, GOOGL stock had recovered some losses but remained down 6%. Year-to-date, GOOGL shares have gained 2.55%. The post-earnings selloff contrasted with retail investor sentiment on Stocktwits, which remained 'extremely bullish,' with 52% of more than 1,300 poll respondents saying they're buying the dip.
Brokerages Lower Alphabet Price Targets While Maintaining Bullish Ratings
Wells Fargo lowered Alphabet's price target to $411 from $418 while maintaining an Overweight rating. The new target implies about 20% upside from Wednesday's close. The brokerage expects tougher Services comparisons, cloud margin pressure and higher second-half capital expenditures to weigh on margins, returns and the stock, according to TheFly.
Morgan Stanley cut its price target to $400 from $415, implying around 17% upside from Wednesday's close, while maintaining an Overweight rating. The firm said Google Cloud continues to show improving returns and expanding GenAI opportunities, though it expects earnings per share to decline about 5% as investments outpace revenues.
Oppenheimer lowered its target to $400 from $445 while maintaining an Outperform rating. The brokerage cited reduced Services margins and higher financing costs for the target cut.
JPMorgan lowered the price target to $420 from $460, implying nearly 23% upside from Wednesday's close, while reiterating an Overweight rating. The firm called the post-earnings selloff a buying opportunity, citing 23% revenue growth and 82% Cloud growth, while attributing the pullback to higher planned capital spending in 2026.
Cantor Fitzgerald lowered its target to $420 from $435 while keeping an Overweight rating. The firm highlighted Google Cloud outperformance, expanding margins and accelerating AI adoption, though higher AI infrastructure spending and limited EBIT upside weighed on the stock.
Truist lowered its price target to $420 from $430 while maintaining a Buy rating. The firm said strong Search and Cloud growth reflected the benefits of AI investments, though higher capital spending, lower Cloud margins and negative free cash flow could weigh on the stock near term.
Piper Sandler lowered its price target to $395 from $445, implying 15% upside from the last close, while maintaining an Overweight rating. It said Google Cloud's 82% year-over-year growth stood out, but higher 2026 capital expenditure guidance and plans for a significant increase in 2027 pressured the shares.
UBS lowered the price target to $379 from $400, implying around 11% upside from Wednesday's close, while maintaining a Neutral rating. The firm expects higher AI spending and hiring to pressure margins and free cash flow, and said it prefers Amazon over Alphabet.
Barclays and Roth Capital Raise Alphabet Price Targets
Barclays raised the price target to $425 from $405, representing about 24% upside from Wednesday's close, while maintaining an Overweight rating. The firm cited accelerating Cloud growth but said AI expansion is driving a spending "explosion" that could pressure margins, according to TheFly.
Roth Capital raised the price target to $440 from $435, which is around 29% upside from Wednesday's close, while maintaining a Buy rating. The firm cited strong Cloud and YouTube performance and recommended buying the recent weakness.
Wedbush maintained its $445 price target and Outperform rating. The price target represents 30% upside from Wednesday's close. It also added Alphabet to its Best Ideas List. The firm said strong Cloud performance reinforces its view that Alphabet's full-stack AI strategy is driving Cloud share gains despite higher AI spending.
Stocktwits Retail Sentiment Remains Extremely Bullish on GOOGL
On Stocktwits, retail sentiment for GOOGL was 'extremely bullish,' unchanged in the past 24 hours, while message volume was 'extremely high' at the time of writing.
A recent Stocktwits poll found retail investors remain broadly bullish on Alphabet following its post-earnings dip despite strong Q2 results. About 52% of respondents said they're buying the dip. While 20% said they're staying away, 11% are holding their existing positions, and 17% are watching from the sidelines. The poll has received over 1,300 votes so far.
FAQ
Why did GOOGL stocks fall after strong Q2 earnings?
GOOGL stocks fell nearly 8% Thursday morning after multiple brokerages lowered their price targets due to Alphabet's higher capital expenditure plans. Despite the company reporting better-than-expected earnings and revenue driven by strong Google Cloud performance, analysts reset their valuation targets citing pressure on margins, free cash flow and earnings from elevated AI spending.
What are brokerages' new price targets for Alphabet stocks?
Brokerages issued varied price targets for Alphabet: Wells Fargo set $411, Morgan Stanley and Oppenheimer set $400, JPMorgan, Cantor Fitzgerald and Truist set $420, Piper Sandler set $395, UBS set $379, Barclays set $425, Roth Capital set $440, and Wedbush maintained $445. Most brokerages maintained bullish ratings (Overweight, Outperform, or Buy) despite the target reductions.
What is retail investor sentiment on GOOGL stocks after the earnings dip?
Retail sentiment for GOOGL on Stocktwits remained 'extremely bullish' with message volume 'extremely high.' A Stocktwits poll of over 1,300 respondents found 52% are buying the dip, 20% are staying away, 11% are holding existing positions, and 17% are watching from the sidelines.
