Wells Fargo Upgrades Alphabet, Highlighting Key AI Advantages
Alphabet (GOOGL), the parent company of Google and YouTube, received an upgrade to “Overweight” from “Equal Weight” by Wells Fargo on Monday, February 23, 2026. Analyst Ken Gawrelski raised the price target to $387, representing a potential 22% upside from Friday’s closing price, signaling confidence in the company’s future performance.
Alphabet’s Recent Performance and Market Position
While Alphabet shares have surged 75% over the past 12 months, significantly outpacing the S&P 500’s 14% gain, the stock has experienced recent struggles alongside other companies in the “Magnificent 7.” In the past month, Alphabet shares have decreased by 4% and remained relatively unchanged year-to-date.
Three Pillars of AI Success
Gawrelski identified three key characteristics that position Alphabet for success in the artificial intelligence landscape: data, distribution, and computing capacity. He believes the company possesses all the necessary components to be a leader in AI, with a strong capacity to support both internal initiatives like Search and Gemini, and external monetization through Google Cloud Platform (GCP).
Expanding Compute Capacity
Alphabet is actively expanding its AI compute capacity, aiming to reach 35 gigawatts by 2028, up from 15 gigawatts at the end of last year. Gawrelski emphasized that compute capacity is increasingly becoming a limiting factor for hyperscalers, suggesting Google’s expansion will provide a competitive advantage. He stated that Google is poised to gain a competitive edge as it increases its leadership in capacity compared to its peers.
Gemini Monetization Potential
The analyst projects that Gemini, Alphabet’s AI model, will generate $12 billion in average recurring revenue by the end of 2027, tripling from $4 billion at the end of last year. This anticipated growth in Gemini monetization is expected to be a significant driver for the stock’s performance.
Wall Street Consensus
The upgrade from Wells Fargo aligns with the broader sentiment on Wall Street. According to LSEG, 52 out of 61 analysts covering Alphabet rate the stock as a “buy” or “strong buy,” with the average price target indicating a nearly 14% upside.
Analyst Information
The analysis was conducted by Ken Gawrelski, an Internet Analyst at Wells Fargo & Company. More information about Ken Gawrelski can be found on LinkedIn.
Worth a look