Google remains range-bound near $350 despite strong cloud growth prospects

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Google awaits catalysts for a breakout

JPMorgan raises its price target on stronger Google Cloud expectations

One of the most notable corporate developments today was JPMorgan's decision to raise its price target for Alphabet from $420 to $425. The bank significantly upgraded its Google Cloud forecast and now expects the cloud division's revenue to grow by approximately 100% in the third quarter, compared with its previous estimate of 88%. The main factor behind the revision was accelerating demand for Google's proprietary TPU processors, which are increasingly used to train and run artificial intelligence models.

Analysts also raised their 2027 earnings-per-share forecast for Alphabet by 3% to $14.05. The scale of the cloud business already points to a fundamental shift in the company's structure: in the second quarter, Google Cloud revenue surged 82% to $24.8 billion, while remaining contractual obligations reached approximately $514 billion. However, such a substantial order backlog also requires faster deployment of computing capacity, making Google's ability to convert contractual commitments into actual revenue without sacrificing profitability one of the most important indicators in the upcoming earnings report.

Gemini advances could strengthen Alphabet's competitive position

Another development worth highlighting is Google's stronger position in the AI model market itself. Today, additional attention focused on reports about the development of Gemini 4 and the expanding use of artificial intelligence to improve subsequent generations of models. According to Google co-founder Sergey Brin, development is gradually entering a stage where AI systems can play an increasingly active role in creating their own successors.

According to the company, the new Gemini 4 Argon model delivers competitive performance compared with leading solutions from OpenAI and Anthropic while offering lower usage costs. This is particularly important for Alphabet, as Gemini's success could simultaneously strengthen Google Cloud's position, make enterprise subscriptions more attractive, and protect the search business from competing AI interfaces.

Earnings report may provide the catalyst for a breakout

Alphabet's next quarterly earnings report is expected on October 28 and could prove decisive in determining whether the stock can break out of its prolonged consolidation. Despite JPMorgan's optimism, analysts at Melius Research maintain a more cautious stance, pointing to uncertainty surrounding the long-term growth prospects of the search business and intensifying competition from OpenAI and Anthropic.

Another question concerns how the economic benefits of AI investments will be distributed between Google and equipment suppliers. As capital expenditures continue to rise, a significant share of additional revenue could initially flow to manufacturers of specialized processors and networking infrastructure.

At this stage, GOOGL, as I noted in Google faces renewed pressure as inflation weakens tech stocks, remains in a consolidation range, with no clear catalysts capable of pushing the stock beyond its current boundaries. As a result, a meaningful change in the situation appears unlikely in the near term.

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