Mizuho raised its price target on Alphabet (NASDAQ: GOOGL) to $420 from $410, while maintaining an Outperform rating, citing increased confidence in Google Cloud’s growth trajectory.
The firm significantly raised its cloud revenue estimates based on recent developments, including signals surrounding the Anthropic partnership and a refined analysis of backlog trends.
Mizuho argued that consensus estimates underestimate both revenue growth and margin potential, particularly if Tensor Processing Unit (TPU) sales evolve into a more asset-light, royalty-like model.
In its bull-case scenario, the firm projected cloud revenue reaching $149 billion in 2027, compared to the Bloomberg consensus estimate of $116 billion. With incremental margins of approximately 55%, this could translate into an additional $18 billion in operating income and about $1.23 in incremental EPS after taxes.
Applying a 35x price-to-earnings multiple, Mizuho estimated this could add roughly $43 per share, representing approximately 14% upside.
The firm raised its EPS forecasts for 2026 and 2027 to $11.81 and $14.04, respectively, above Street estimates of $11.62 and $13.56.
Mizuho also noted that as cloud becomes a larger contributor to operating income, Alphabet’s valuation multiple could expand, reflecting greater exposure to AI infrastructure growth.
