Key Highlights
- Shares of GOOGL declined approximately 4% following news that Gemini 3.5 Pro launch has been postponed after underperforming internal testing standards
- First quarter FY2026 earnings per share reached $5.11 compared to analyst expectations of $2.63—representing a massive 94% outperformance—while revenues climbed 21.8% to $109.90B
- Investment firm Wedbush began tracking the stock with an industry-leading $671 valuation target, characterizing the recent decline as an attractive entry point
- BMO Capital analyst Brian Pitz increased his valuation from $435 to $455 while maintaining his Buy recommendation
- Among the 64 Wall Street analysts tracking GOOGL, 57 recommend buying the stock, with no sell recommendations issued
Shares of Alphabet (GOOGL) finished Friday’s session at $354.46, representing a roughly 4.44% decline from the opening price near $373. The catalyst for the downturn: emerging reports indicating that Google’s anticipated Gemini 3.5 Pro artificial intelligence model has experienced a delay following its failure to satisfy internal performance criteria.
The market reaction occurred even as Alphabet delivered one of its most impressive quarterly financial performances in recent memory. First quarter FY2026 earnings per share registered at $5.11, substantially exceeding the Wall Street consensus of $2.63—a remarkable 94% upside surprise. Total revenues reached $109.90 billion, marking a 21.8% year-over-year increase.
Google Cloud emerged as the star performer, posting 63% growth to reach $20.03 billion, with its committed backlog nearly doubling from the previous quarter. That backlog currently totals $460 billion.
Concerns about artificial intelligence talent retention compounded the stock’s downward pressure. Noam Shazeer, who co-led Gemini development, returned to OpenAI shortly after rejoining Google via the Character.ai transaction. Additionally, Nobel Prize winner John Jumper left DeepMind to join Anthropic. These high-profile departures fueled investor anxiety about Google’s competitive position in the AI race.
Nevertheless, Wall Street analysts largely maintained their confidence.
Wedbush Establishes Most Aggressive Target
Wedbush’s analyst Ygal Arounian launched coverage Thursday with a Buy recommendation and established a $671 valuation target—marking the highest projection among Street analysts. Arounian characterized the model delay as a “temporary blip” and positioned the share price weakness as an opportune buying moment.
The $671 target implies potential upside approaching 90% from present trading levels.
BMO Capital’s top-rated analyst Brian Pitz similarly stood by his bullish stance. He maintained his Buy rating while elevating his price objective to $455 from $435, referencing strengthened Google Cloud projections for Q4 and fiscal 2027, revised upward by 2% and 13% respectively. Pitz highlighted increasing infrastructure capacity and strong enterprise cloud adoption as drivers for his updated forecast.
The average analyst price target currently stands at $437.79, suggesting approximately 26% upside potential from Friday’s closing price. The highest individual target of $515 points to possible gains of 45%.
Berkshire’s Stake and Tech-Wide Weakness
Friday’s sell-off extended beyond Alphabet alone. Broader technology stocks experienced pressure, with AI-focused companies bearing the brunt. META declined 3.19%, MSFT retreated 2.14%, and NVDA slipped 1.17%. GOOGL’s steeper drop relative to competitors suggests the Gemini news carried additional weight.
Warren Buffett, operating now under successor Greg Abel’s leadership, disclosed that Berkshire Hathaway established an Alphabet position via a $10 billion private placement transaction. Buffett identified artificial intelligence capital spending as the primary risk factor—Alphabet’s capex trajectory reduced free cash flow by 46.63% year-over-year during Q1.
Friday’s trading volume registered at 10.79 million shares, significantly below the three-month daily average of 34.05 million.
Despite Friday’s retreat, GOOGL maintains a year-to-date gain of 11.11% and has appreciated 91.54% over the trailing twelve months.
Among 64 analysts providing coverage: 14 rate Strong Buy, 43 rate Buy, 7 rate Hold, with zero Sell ratings.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
