GOOG: Target Raised to $385 as AI Search Sets the Pace for 2026
Callout: Citizens Financial Group's Andrew Boone lifted Alphabet's price target to $385 from $340, pointing to AI Mode, AI Overviews in Search, and the Gemini 3 model as near-term drivers. The target implies roughly 22% upside from Tuesday's close, per Barron's.
U.S. markets were closed Thursday for the New Year's holiday; trading resumes Friday. Alphabet's Class C shares (GOOG) last closed at $313.80 on Dec. 31, down about 0.2%, with a market cap near $2.94 trillion.
Why the call matters
The note lands after a 2025 run that lifted Alphabet roughly 65%, according to Reuters. With multiples stretched, investors need evidence that AI features in Search boost queries, engagement, and ad pricing without eroding margins.
Competition is active. ChatGPT and Perplexity continue to court users. Boone frames AI-enhanced search as a tailwind for query growth now; the open question is monetization and mix-shift risk inside the ad stack.
What pros should watch
- Monetization path: Do AI Overviews support higher-intent ad inventory or displace clicks? Watch paid click growth, CPC, and TAC dynamics in Q4/Q1.
- Cost curve: Data-center and chip spending remains the margin swing factor across Big Tech. Track AI capex, depreciation cadence, and Cloud gross margin.
- Share defense: User behavior across Search vs. chat-style answers. Any evidence of traffic leakage to rival assistants matters for out-year models.
Upcoming catalysts
- Friday 10:00 a.m. ET: ISM Manufacturing PMI. November printed 48.2, below the 50 expansion line (ISM PMI).
- Next week: JOLTS on Jan. 7 and the monthly Employment Report on Jan. 9. Both are closely watched by the Fed and can move mega-cap growth (BLS release schedule).
- Company-specific: Alphabet reports Feb. 3 after the close (per Yahoo Finance). Focus on Search ad trends, YouTube momentum, Google Cloud operating leverage, and AI-related capex.
Positioning framework
- Thesis support: If AI Overviews and AI Mode drive incremental queries and protect commercial intent, ad revenue should hold up even with mixed macro.
- Risk flags: Higher inference costs, slower Cloud margin expansion, or user shifts to third-party chatbots could compress the bull case.
- Levels: Investors Business Daily cites an all-time high at $326.92 (2025). That's a practical marker as trading restarts in 2026.
Bottom line
Boone's $385 target captures a simple bet: AI-enhanced Search can add engagement before it adds too much cost. If upcoming prints show query lift, stable ad pricing, and a disciplined AI capex curve, the multiple holds. If not, expect the debate to pivot back to margin math.
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