Wells Fargo upgraded Alphabet shares to Overweight in a note issued on Monday, arguing that the company is well placed to lead the next phase of artificial intelligence on the strength of three attributes it identified as critical to AI success: customer data, distribution and compute capacity.
Analyst Ken Gawrelski, who authored the note, raised the firm’s price target on Alphabet to $387 from $354. In his view, Google’s positioning across those three traits underpins a durable advantage as industry use cases for large-scale AI services expand.
Capacity analysis at the core
The upgrade leans heavily on Wells Fargo’s capacity workbook, called Project Google. The bank said its analysis shows compute capacity expanding to 35GW by 2028 from 15GW at year-end 2025, a change the firm said extends Google’s lead relative to the hyperscaler peer group.
Wells Fargo framed that capacity advantage as consequential so long as hyperscaler ambitions remain -bounded by compute capacity. The bank argued the gap in raw compute resources gives Google a sustained edge across its cloud business, search franchise and emerging agentic AI efforts.
Revised cloud forecasts
The firm materially increased its Google Cloud forecasts. Wells Fargo now expects Google Cloud Platform (GCP) revenue growth of 60% year-on-year in 2026, which it noted is 11% above consensus. It also projected 2027 and 2028 GCP growth to run 16% and 12% above consensus, respectively.
Alongside revenue forecasts, Wells Fargo estimated GCP’s compute capacity rising to 16.9GW in 2028 from 7.6GW in 2025. The bank said its updated cloud operating income projections for 2026 and 2027 are now 10% to 15% above Street estimates.
Monetization and partnerships
Wells Fargo highlighted potential monetization via a Gemini subscription business, forecasting it could reach $12 billion in annual recurring revenue (ARR) from $4 billion exiting 2025. The note also flagged possible upside tied to Google’s relationship with Apple’s Siri.
Risks and market dynamics
The bank acknowledged that the AI search transition remains a risk. In assessing competitive dynamics, Wells Fargo said Google has effectively -stalemated ChatGPT at approximately 13% share since July 2025, and that search activity has since expanded, but it still flagged transition risk as a factor to watch.
Overall, Wells Fargo’s upgrade is rooted in its projection of sizable compute expansion and in the view that those resources will enable stronger cloud economics, greater monetization opportunities and a competitive advantage across search and new AI-driven products.