The Market May Be Underestimating This Stock

The Market May Be Underestimating This Stock

Vandita Jadeja

Tue, September 1, 2026 at 8:30 PM GMT+3 4 min read

Quick Read

• GOOG earns a BUY with a $435 price target implying 27% upside, powered by Google Cloud's 82% revenue growth and a $514 billion backlog.

• MSFT trades at 26x and META at 19x forward earnings, making GOOG's 16x multiple look cheap for its growth rate.

• Gemini has scaled to 950 million monthly active users while Cloud operating margins expanded to 36% from 21% a year earlier.

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Alphabet (NASDAQ:GOOG) has quietly become one of the most compelling AI plays in mega-cap tech, and the market appears to be pricing it as though Search were decelerating, even as growth accelerates.

Our 24/7 Wall St. price target for Alphabet is $435.40, which implies 26.98% upside from the current price of $342.88. We rate GOOG a buy with a 90% confidence level, among the highest we assign in the communication services sector.

24/7 Wall St. Price Target Summary

A Cloud Business Suddenly Growing Like a Startup

Alphabet shares are up 9.41% year to date and 61.92% over the past year, yet the stock still sits well below the 52-week high of $404.23.

The Q2 FY2026 report was the catalyst that reset the narrative: revenue of $119.8 billion grew 24% year over year, EPS came in at $9.11 versus a $3.0427 estimate, and Google Cloud revenue accelerated to 82% growth. Cloud backlog now stands at $514 billion, and Motley Fool argued in late August that investors are still underestimating Google Cloud. I agree.

Why Bulls See a Breakout Ahead

The bull case rests on three pillars. First, Cloud economics are inflecting: Q2 Cloud operating margin expanded to 35.6% from 20.7% a year earlier.

Second, Gemini is scaling fast, with 950 million monthly active users and API throughput at 22 billion tokens per minute.

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Third, Sundar Pichai told analysts "over the past year, we've gotten more bullish on the opportunities ahead". Our bull scenario points to $452.54, and the Street's high end sits at $422.34 consensus with 13 strong buys and 44 buys.

What Could Go Wrong

Q2 free cash flow was negative $5.855 billion as capex hit $44.9 billion, long-term debt jumped from $46.5 billion to $98.2 billion, and the buyback was suspended. Bears would note that our bear scenario lands at just $360.50.

Counterfactually, bulls would argue this capex reflects genuine supply constraints, with backlog of $514 billion demanding investment now (the same buildout that lifts the power, cooling, and networking names we profiled in a free AI infrastructure report). FCF still totaled $53.3 billion on a trailing basis.

How Alphabet Compares to Microsoft and Meta

Microsoft (NASDAQ:MSFT) trades at a forward P/E of 26 with quarterly revenue growth of 17.7%, meaningfully slower than Alphabet's 24.2%.

Meta Platforms (NASDAQ:META) sits at a forward P/E of 19, closer to GOOG but with quarterly earnings growth of negative 13.4%. Against this field, Alphabet's forward P/E of 16 looks conservative, which is why our 24/7 Wall St. price target sits comfortably above current levels.

Why the Setup Favors Alphabet

The 24/7 Wall St. price target of $435.40, a buy rating, and 90% confidence reflect a rare setup: hyperscaler growth at a value multiple.

The setup looks compelling if Cloud growth stays north of 60% into Q3. Caution is warranted if capex balloons past guidance without corresponding backlog conversion. On balance, the risk/reward favors ownership.

These projections assume Alphabet continues executing on Cloud and Gemini. Significant upside or downside could come from AI infrastructure ROI and regulatory action in the EU and US.

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Contact editorial@247wallst.com for any questions or corrections.