Wells Fargo has upgraded Alphabet Inc. to Overweight from Equal Weight and increased its price target to $387 from $354, citing what it sees as an improving structural position driven by a substantial expansion in compute capacity and a stronger outlook for Google Cloud.
The upgrade comes amid a wider set of analyst revisions: available data shows 22 analysts have revised their earnings estimates higher for the upcoming period. Wells Fargo pointed specifically to Alphabet’s plan to expand compute capacity to 35 gigawatts by 2028 from 15 gigawatts at year-end 2025, a step the bank says extends Alphabet’s capacity lead versus other hyperscalers.
Revised Cloud forecasts and capacity assumptions
Wells Fargo raised its revenue forecast for Google Cloud to 60% year-over-year growth in 2026, a projection it notes is 11% above consensus. For subsequent years the firm modeled growth of 42% in 2027 and 28% in 2028, figures that are 16% and 12% higher than Street estimates, respectively. In parallel with those top-line assumptions, the bank estimates Google Cloud will expand physical capacity to 16.9 gigawatts in 2028 from 7.6 gigawatts in 2025.
The firm also adjusted its operating income expectations for Cloud, putting fiscal 2026 and 2027 Cloud operating income estimates 10% to 15% ahead of consensus. Those revisions reflect Wells Fargo’s view that larger scale and faster revenue growth will produce better-than-expected margin performance for the Cloud unit.
Gemini subscription ramp and potential Siri upside
Wells Fargo incorporated a consumer subscription revenue stream tied to Gemini into its projections. The bank expects this Gemini consumer subscription business to reach $12 billion in annual recurring revenue by the end of 2027, up from $4 billion exiting 2025. Separately, the firm flagged a possible contribution from an Apple Siri relationship as a source of upside that could materialize in 2027 or later.
Valuation and analyst context
On valuation, Wells Fargo highlighted Alphabet’s PEG ratio of 0.84, characterizing the stock as trading at a discount to its growth rate under the bank’s assumptions. Other sell-side activity includes Citizens reiterating its Market Outperform rating with a $385.00 price target; the Citizens analyst emphasized the expansion of AI-driven search as broadening the types of queries and strengthening commercial intent inference.
Additional industry developments
Alphabet has introduced Gemini 3.1 Pro, an upgraded model that the company says improves reasoning ability for complex problem-solving in areas such as science, research and engineering. The model achieved a verified score of 77.1% on the ARC-AGI-2 benchmark, which more than doubles the reasoning performance of the prior version, according to the reporting cited.
Waymo encountered a policy setback when a New York state proposal that would have allowed commercial robotaxi services outside New York City was withdrawn by the governor. That decision affects Waymo’s ability to test and deploy driverless services without human safety operators in vehicles.
Policy and market commentary also touched other areas: the Irish government is reportedly considering age restrictions on social media platforms as part of a wider AI strategy, while a Wedbush analyst named several potential catalysts that could help reverse recent weakness in the technology sector.
Implications for investors
Wells Fargo’s upgrade is grounded in a view that larger-scale compute capacity and stronger cloud revenue and operating income growth justify a more favorable rating. The bank’s model incorporates a faster Google Cloud ramp, a meaningful contribution from a Gemini subscription product, and potential upside from partnerships such as Siri. Those elements, taken together, underpin the higher price target and the more constructive stance.
Investors should note the range of cross-cutting factors affecting the outlook: capacity build-outs and capital deployment, cloud demand and pricing dynamics, the monetization path for AI products, and regulatory or policy decisions that could influence adjacent businesses such as autonomous mobility.
Wells Fargo’s revisions reflect an expectation of above-consensus growth and profitability for Google Cloud in the mid-term, but the bank’s stance will be tested by execution on capacity expansion, commercial adoption of AI products, and external policy developments.