Alphabet's Cloud Ambitions Fuel a $420 Target and a High-Stakes Quarter

Mizuho hikes Alphabet's price target to $420, forecasting $149B Google Cloud revenue by 2027. Growth fueled by AI deals with Anthropic & Intel, massive $180B capex, and Waymo expansion, amid regulatory scrutiny.

Mizuho Securities has set a bold new benchmark for Alphabet, raising its price target to $420 and maintaining an Outperform rating. The bank's analysts are forecasting a staggering $149 billion in revenue for Google Cloud by 2027, a figure that dramatically outpaces the broader market consensus of $116 billion. This extreme confidence underscores the high-stakes environment surrounding the tech giant as it prepares to report first-quarter earnings.

The optimism is rooted in more than just cloud projections. Alphabet's strategic partnership with AI startup Anthropic and a significant expansion of its chip supply chain are seen as key growth drivers. Beyond its existing alliance with Broadcom, which includes a long-term supply agreement for custom chips running through 2031, Alphabet has deepened its collaboration with Intel. The partnership now extends across multiple chip generations, focusing on Intel's latest Xeon-6 processors and co-developed Infrastructure Processing Units (IPUs) designed to boost efficiency in AI data centers.

This aggressive investment in infrastructure comes at a colossal cost. The company's planned capital expenditures for 2026 are projected to be between $175 and $185 billion, a massive outlay primarily directed at building out its AI capabilities. The spending is a bet on future monetization, with the market keenly awaiting details on AI-powered search overviews in the upcoming earnings report.

While the cloud and AI narrative dominates, Alphabet's other ventures are also progressing. Its autonomous driving subsidiary, Waymo, now operates commercially in eleven cities following its expansion into Nashville. The service completes 500,000 weekly rides, is accessible via the Lyft app, and aims to reach 20 markets by year-end. Waymo's growth was bolstered by a $16 billion funding round in February, with Alphabet providing the majority of the capital.

However, this period of ambitious expansion and investment is not without its headwinds. Regulatory scrutiny remains a persistent theme. In April, Turkey's competition authority launched a formal investigation into Google's advertising and billing practices, adding to existing antitrust pressures from regulators in the EU and the United States. The outcome could range from fines to mandated changes in how the company operates within the Turkish market.

The financial community is clearly divided on how to interpret these crosscurrents at current valuations. Alphabet's stock has surged approximately 99% over the past twelve months, pushing its Relative Strength Index (RSI) to an overbought level of 78.5. Recent regulatory filings reveal starkly different moves by major institutional investors: Pictet Bank & Trust reduced its position by 21.6% to 13,605 shares, while State Street Corp increased its holdings by 1.8% to over 229 million shares. Capital World Investors was a major buyer, adding more than 11.6 million shares to its portfolio.

All eyes are now on the first-quarter results, due April 29, 2026. Investors will measure performance against a high bar set in late 2025, when Google Search revenue hit $63.07 billion—a 17% annual increase—and Google Cloud revenue jumped 48% to $17.66 billion, with the segment's operating income more than doubling to $5.31 billion. The report will need to validate both the resilience of the core advertising business and the accelerating momentum in the cloud division that analysts like those at Mizuho are betting so heavily on.