Oppenheimer Boosts Alphabet's Price Target Amid Growing AI Adoption and Survey Results

Oppenheimer has raised Alphabet's (GOOG) price target from $200 to $220 and maintained an Outperform rating. The decision is influenced by a survey indicating growing adoption of AI Mode and its real-time query capabilities. The valuation of Alphabet's Search division is estimated to be 6.2 times projected 2025 EBITDA, suggesting current AI-related risks are adequately discounted.

Oppenheimer has raised its price target for Alphabet Inc. (NASDAQ: GOOG) to $220 from $200, maintaining an "Outperform" rating. The decision is driven by a recent survey indicating strong consumer adoption of Alphabet's AI Mode and its real-time query capabilities. The brokerage also assigned a base case valuation of $300 billion to Waymo, Alphabet's autonomous driving unit, based on expectations for the unit to generate $100 billion in EBITDA by 2040 [1].

Among "knowledgeable" respondents, 66% found AI Mode results more helpful than Google Search, while 60% rated them better than ChatGPT. Notably, 75% of ChatGPT payers preferred AI Mode. Oppenheimer added that AI Mode’s integration with real-time search queries and frequent link engagement — with 53% of knowledgeable users clicking links often or very often — could reinforce Alphabet’s dominance in digital advertising. The firm also noted that Google’s Gemini app showed "surprisingly good traction," with 65% usage among respondents compared to 76% for ChatGPT and 39% for Meta AI [1].

Oppenheimer's new $220 price target assumes a 21-times multiple on Alphabet’s forecast 2026 earnings per share, compared with peer Meta Platforms’ 23-times valuation. The brokerage sees the current valuation of Alphabet's Search division at just 6.2 times projected 2025 EBITDA, suggesting current AI-related risks are adequately discounted [1].

Alphabet has been expanding its AI capabilities globally. Following its US launch, AI Mode is now available in India, leveraging a custom version of Gemini 2.5. This international expansion allows users to ask longer text prompts and supports voice input with a neat waveform, as well as adding images using Google Lens to their questions. AI Mode is accessible via a shortcut in the Search bar or at google.com/aimode on the web [3].

Additionally, Alphabet announced that Google-powered smartwatches will be able to access Gemini AI, starting today. The full rollout across devices could take a few weeks, with the ability to access Gemini AI directly starting today on Wear OS watches, including those from Pixel, Samsung, OPPO, OnePlus, and Xiaomi. This integration allows users to ask Gemini questions right on their wristwatches, potentially enhancing user engagement with Google services [4].

These developments indicate Alphabet's commitment to AI innovation and its potential to drive future growth. However, investors should consider the company's heavy capital expenditures and the potential impact on its free cash flow. Alphabet's stock remains expensive, with a price-to-free-cash-flow ratio of more than 28 and a long-term growth rate of less than 15% [4].

References:
[1] https://www.proactiveinvestors.co.uk/companies/news/1074441/alphabet-price-target-raised-on-strong-ai-adoption-waymo-valuation-1074441.html
[2] https://finance.yahoo.com/quote/GOOGL.SN/
[3] https://9to5google.com/2025/07/07/google-ai-mode-india/
[4] https://finance.yahoo.com/news/why-alphabet-stock-popped-today-193400368.html