U.S. equities kicked off 2026 with fresh momentum, as major benchmarks climbed to new peaks and investor confidence returned in force. The rally has been fueled largely by artificial intelligence, with Big Tech once again leading the charge. Among the standout performers is Alphabet, whose stock surged to new all-time highs in January, reigniting a familiar debate for investors: Is Google still worth buying at these elevated levels, or has the easy upside already passed?
With Wall Street analysts growing increasingly bullish on Alphabet’s AI-driven strategy, the stock’s breakout reflects more than just market optimism—it highlights Google’s expanding role across the entire AI ecosystem. From custom chips and cloud infrastructure to consumer-facing applications, Alphabet sits at the center of the AI value chain. But strong fundamentals and lofty expectations also raise questions about valuation, risk, and long-term returns.
Google’s Stock Performance: A Strong Run Into 2026
Alphabet, the parent company of Google, YouTube, Android, and Google Cloud, enters 2026 with powerful momentum. The company commands a dominant position in online search and digital advertising while steadily expanding its footprint in cloud computing, AI software, and autonomous vehicles through Waymo.
In 2025 alone, Alphabet shares climbed roughly 65%–70%, making it one of the top performers among the so-called “Magnificent Seven.” Over the past 12 months, GOOGL has significantly outpaced the broader market, reflecting renewed investor confidence in Google’s ability to defend and monetize its core businesses in the age of generative AI.
That rally, however, has pushed valuations higher. Alphabet now trades near 30 times trailing earnings and around 10 times sales—well above sector averages. While these multiples imply premium pricing, investors appear willing to pay up for durable growth, strong cash flows, and long-term AI optionality.
What Drove Google to New All-Time Highs?
Alphabet’s latest breakout followed a January upgrade from Cantor Fitzgerald, which labeled the company the “king of all AI trades.” The upgrade emphasized Alphabet’s unique advantage: few companies control as much of the AI stack, from proprietary data and custom Tensor Processing Units (TPUs) to large language models like Gemini and massive consumer platforms.
Following the upgrade, GOOGL shares briefly surged above $330, marking a fresh intraday record and extending a multi-month uptrend. The move was supported by strong earnings momentum, improving sentiment around AI monetization, and confidence that Google can compete effectively with rivals such as Microsoft and OpenAI.
Earnings Strength Backs the Rally
Alphabet’s most recent quarterly results helped justify investor enthusiasm. In the third quarter of 2025, the company delivered its first-ever $100 billion revenue quarter, highlighting the scale of its operations.
- Revenue: $102.35 billion, up 16% year over year
- Google Services: $87.05 billion, driven by Search and YouTube growth
- Google Cloud: $15.16 billion, up 34% year over year
- Net Income: $34.98 billion, a 33% increase
- EPS: $2.87, up 35% year over year
Free cash flow remained robust at roughly $24.5 billion, even as Alphabet continued to invest aggressively in AI infrastructure. Management raised full-year capital expenditure guidance to as much as $93 billion, underscoring its commitment to data centers, chips, and long-term AI capacity.
AI, Cloud, and New Growth Engines
Looking ahead, Alphabet’s growth story extends beyond traditional advertising. Google Cloud continues to gain share as enterprises adopt AI-powered workloads, while Gemini is being integrated across products like Gmail, Search, and Workspace to boost engagement and productivity.
Recent strategic moves further reinforce Alphabet’s ambitions. The company announced a multibillion-dollar acquisition of renewable energy and data center assets to secure long-term power for AI expansion. Meanwhile, regulatory decisions around its proposed cybersecurity acquisition could shape its cloud security strategy in Europe.
Alphabet’s “Other Bets” also add optionality. Waymo reached record usage levels in 2025, signaling progress toward commercial viability in autonomous transportation—an area that could become a meaningful contributor over time.
Analyst Outlook: Bullish, But More Selective
Wall Street sentiment toward Google remains broadly positive. Most analysts rate the stock a “Strong Buy,” citing durable earnings growth and AI leadership. However, the stock is now trading close to the average analyst price target, suggesting more moderate upside in the near term.
Price targets range widely:
- Consensus targets cluster near the low-to-mid $330s
- Bullish forecasts from firms like Wedbush and Citi reach $350
- More aggressive calls envision upside toward $380 if AI monetization accelerates
The key takeaway: analysts still like Alphabet’s long-term story, but many acknowledge that expectations are high and returns may be less explosive than in 2025.
Conclusion: Buy, Hold, or Wait?
Alphabet’s rise to new all-time highs in early 2026 reflects a company that has successfully repositioned itself for the AI era while maintaining dominance in its core businesses. Strong earnings, massive cash generation, and deep integration of AI across products support the bull case.
That said, valuation is no longer cheap, and much of the near-term optimism appears priced in. For long-term investors who believe in Google’s AI leadership and ecosystem strength, the stock still makes sense as a core holding. More cautious investors, however, may prefer to wait for pullbacks or confirmation that AI investments are translating into sustained margin expansion.
In short, Google remains a high-quality compounder—but at record highs, discipline and time horizon matter more than ever.