BMO Capital Markets raised its price target for Alphabet Inc. (NASDAQ:GOOGL) to $400.00 from $343.00 and retained an Outperform rating on the shares. The firm also labeled Alphabet a "Top Pick." At the time of the note, Alphabet was trading at $331.25, carrying a price-to-earnings ratio of 30.81 and a market capitalization of $4.01 trillion. InvestingPro analysis referenced in the note indicates the stock is trading above its Fair Value estimate.
BMO based its decision on Alphabet's "very impressive" fourth-quarter results for 2025, which produced a 2% revenue beat overall. The firm emphasized two drivers behind the upside: Search revenue outpaced expectations by 3% - rising 16% year-over-year on an ex-foreign-exchange basis - and Google Cloud surpassed estimates by 8%, posting 48% year-over-year growth. According to BMO, these beats helped lift Alphabet's revenue growth to 15.09% over the last twelve months.
The research note acknowledged pockets of weakness amid the strong quarter. YouTube revenue missed estimates by 4%, a shortfall BMO attributed to difficult year-over-year political advertising comparisons. Despite that miss, the firm judged the Search and Cloud outperformance sufficient to validate a more bullish valuation and continued conviction in the company's growth trajectory.
BMO also drew attention to Alphabet's AI progress. The firm highlighted Gemini reaching 750 million monthly active users and cited a substantial reduction in cost-to-serve - a 78% decline in 2025 - as an important operational improvement. Those metrics were presented as evidence of both user traction and improved unit economics tied to the company's AI investments.
In reiterating its Outperform stance and Top Pick designation, BMO signaled support for Alphabet's planned capital deployment, backing the company's $175-185 billion capital expenditure guidance for 2026. The note portrayed Alphabet as a leader across the AI stack and as a business with sizeable scale in search, advertising, and cloud computing.
Several other research houses reacted to Alphabet's quarter with upward revisions and sustained positive ratings. JPMorgan raised its price target to $395 while keeping an Overweight rating. Stifel likewise increased its target to $395, calling out Google Cloud's strong performance and potential for continued expansion. DA Davidson raised its price target to $310 after the results exceeded revenue and profit expectations, and Cantor Fitzgerald reiterated an Overweight rating with a $370 target, noting that both revenues and EBIT beat Street estimates.
Beyond the core advertising and cloud businesses, Alphabet's autonomous vehicle unit Waymo disclosed operational moves concurrent with the earnings period. Waymo announced an expansion into Sacramento and a return to Boston to extend its operations, and it reported testing of its sixth-generation Waymo Driver in snowy conditions to improve winter-weather performance.
Overall, BMO's update underscores a view that Alphabet's recent quarter validated ongoing growth in Search and Cloud, while AI product adoption and sharp reductions in cost-to-serve provide incremental support for the firm's higher valuation. The broader analyst community responded with mostly positive target adjustments, and Alphabet's mobility unit continued to advance its testing and geographic footprint.