Wells Fargo Upgrades Alphabet, Points to AI Dominance

Wells Fargo has upgraded Alphabet (GOOGL) to Overweight from Equal Weight, citing the company’s strong position to capitalize on the next wave of artificial intelligence innovation. The upgrade, announced on Monday, February 23, 2026, includes a raised price target of $387, representing a potential 22% upside from Friday’s closing price [CNBC].

Three Key Traits for AI Success

Analyst Ken Gawrelski highlighted three core strengths that position Alphabet for AI leadership: data, distribution, and computing capacity. Gawrelski believes Google possesses “all the pieces necessary to be an AI winner,” with a leading capacity to support both internal projects like Search and Gemini, and external monetization through Google Cloud Platform (GCP) [CNBC].

Expanding Compute Capacity

Wells Fargo’s analysis indicates Alphabet is significantly expanding its AI compute capacity, projecting growth to 35 gigawatts (GW) by 2028, up from 15 GW at the end of 2025. This expansion is expected to provide a competitive advantage as compute capacity becomes a key limiting factor for hyperscalers [CNBC].

Gemini and Google Cloud Growth Projections

The firm anticipates substantial growth in Gemini’s revenue, projecting it to triple to $12 billion by the end of 2027 from $4 billion at the end of 2025. Wells Fargo raised its forecasts for Google Cloud, expecting year-over-year revenue growth of 60% in 2026, exceeding consensus estimates by 11%. Growth projections for 2027 and 2028 are also 16% and 12% above consensus, respectively [CNBC].

GCP’s computing capacity is expected to increase to 16.9GW in 2028 from 7.6GW in 2025. Cloud’s operating revenue projections for 2026 and 2027 are now 10% to 15% above Wall Street estimates [CNBC].

Market Position and Analyst Sentiment

Despite a recent dip aligning with the broader “Magnificent 7” trend – down 4% in the past month and little changed year-to-date – Alphabet’s stock has surged 75% over the last 12 months. The upgrade from Wells Fargo aligns with broader Wall Street sentiment, with 52 out of 61 analysts rating the stock as a buy or strong buy [CNBC].

Competition and Search Stability

Wells Fargo noted that Google has “effectively stalled ChatGPT at ~13% share since July 2025,” and search activity is now expanding [CNBC].

Analyst Ken Gawrelski of Wells Fargo has a 3.89-star rating on TipRanks and covers 21 stocks [TipRanks]. He has issued 123 stock ratings in the past year [MarketBeat].