**Raymond James Upgrades Alphabet to Strong Buy, Projecting Accelerated AI Stack Growth**
Citing a pivotal moment in its technological evolution, brokerage Raymond James has significantly elevated its investment stance on Alphabet (NASDAQ:GOOGL), upgrading the stock to a "Strong Buy" rating. The firm believes the technology giant is initiating an aggressive phase where its artificial intelligence infrastructure is achieving peak performance, a shift expected to necessitate substantial upward adjustments to mid-term financial estimates.
Analyst Josh Beck stated on Thursday that his comprehensive, bottom-up research focusing on Google Cloud Platform (GCP) and the core Search business resulted in significantly higher revenue forecasts for 2026 and 2027, with his projected 2027 revenue now comfortably surpassing the prevailing consensus view on Wall Street.
Beck’s central thesis posits that Alphabet is likely entering a cycle defined by an "improving AI Stack narrative and upward revisions," positioning it as perhaps the highest-quality AI acceleration growth story among publicly traded mega-cap technology firms. He emphasized that this AI-driven expansion, rather than simple mean reversion trading plays, would serve as the primary performance catalyst driving the company’s success in 2026.
### Robust Expectations for Cloud and Search
Specifically examining the Cloud segment, Beck projects aggressive growth rates for GCP, modeling expansion of 44% in 2026 followed by 36% in 2027—figures that notably outpace broader Street expectations. This anticipated acceleration is fueled by robust contributions stemming from both infrastructure and platform services. Key drivers include large-scale deployments of proprietary TPUs (Tensor Processing Units) and standard GPUs (Graphics Processing Units), alongside the increasing adoption of the Gemini API and the Vertex AI platform.
The firm provided granular component estimates for the Cloud division, modeling that GCP could potentially conclude 2027 with roughly $25 billion in annualized revenue derived specifically from TPUs, an additional $20 billion from GPUs, $10 billion from the Gemini API, and approximately $2.5 billion sourced from Vertex AI.
Turning to the flagship Search division, Beck anticipates growth of 13% in both 2026 and 2027, exceeding generally lower prevailing market assumptions. The analysis suggests that any expected declines in conventional core search activity will be entirely counterbalanced by the rapidly expanding adoption of new AI-centric features, including AI Overviews, AI Mode, and the deeper integration of Gemini.
Furthermore, Raymond James expects that the enhanced context and improved conversion rates provided by AI-driven queries will support better-than-average growth in the critical cost-per-click (CPC) metric. The research cited Liz Reid, Head of Google Search, who highlighted that features such as AI Overviews encourage users to engage in more extensive and complex searches, ultimately generating more queries and links, thereby amplifying long-term monetization avenues.
Raymond James concluded that its valuation fully incorporates the anticipated, broad-based revenue acceleration across Alphabet’s evolving technological ecosystem. The brokerage established a compelling $400 price target, derived from applying a 29x multiple to its 2027 earnings forecast—a premium multiple deemed justified by the accelerating, AI-led expansion spanning both the Cloud and Search segments.
