Google Agrees to Lower Cloud Services Prices Amid US Government Partnership

Google has agreed to reduce its cloud services costs in partnership with the US government, aiming to lower federal IT expenses. Analysts predict a 13.41% upside for Alphabet Inc based on current price targets, with a consensus recommendation of "Outperform" from 21 brokerage firms. The company's GF Value is estimated at $201.53, indicating a 12.78% upside from the current trading price.

Title: Alphabet Inc. (GOOGL) Agrees to Reduce Cloud Services Costs for US Government, Boosting Analyst Optimism

July 02, 2025

Alphabet Inc. (GOOGL) has announced a significant partnership with the U.S. government to reduce cloud services costs, aiming to lower federal IT expenses. This move comes as the tech giant continues to expand its cloud computing services and solidify its market position. Analysts are predicting a 13.41% upside for Alphabet Inc. based on current price targets, with a consensus recommendation of "Outperform" from 21 brokerage firms [2].

The GF Value for Alphabet Inc. is estimated at $201.53, indicating a 12.78% upside from the current trading price. This positive outlook is driven by several factors, including the company's strong performance in AI and cloud computing, as well as its growing client base and strategic partnerships.

In the first quarter of 2025, Google Cloud revenues jumped 28.1% year over year to $12.26 billion, driven by robust growth in its cloud platform and AI infrastructure [1]. The company's partnership with NVIDIA NVDA has also been a key driver, with Google Cloud being the first cloud provider to offer NVIDIA's B200 and GB200 Blackwell GPUs and set to offer its next-generation Vera Rubin GPUs [1].

The collaboration with the U.S. government is expected to further boost Google Cloud's footprint and client base. By reducing cloud services costs, Alphabet Inc. is positioning itself as a more attractive option for federal agencies, which are under increasing pressure to reduce IT expenses.

Despite these positive developments, Alphabet Inc. faces several challenges. The company's focus on leveraging AI to drive growth has led to regulatory headwinds, with the Department of Justice (DOJ) suing the company over alleged anticompetitive deals [1]. Additionally, the company is expected to invest roughly $75 billion in capital expenditures in 2025 to build up its technical infrastructure, which could lead to increased variability in cloud revenues [1].

However, analysts remain optimistic about Alphabet Inc.'s long-term prospects. The company's growing AI capabilities and significant investments in cloud computing bode well for long-term investors. So, investors who have already invested in GOOGL stock should stay put, according to some analysts.

References:
[1] https://finance.yahoo.com/news/google-clouds-growing-clientele-push-154900940.html
[2] https://www.ainvest.com/news/oppenheimer-raises-alphabet-price-target-220-maintains-outperform-rating-2507/