AI enhances search experience Wall Street crazily “praises” Alphabet (GOOGL.US, GOOG.US), optimistic about its 26-year upward outlook

The Zhitong Finance App learned that as artificial intelligence continues to improve the utility of search tools, analysts covering Google's parent company Alphabet (GOOGL.US, GOOG.US) are becoming more optimistic about the company's stock price prospects in 2026. A number of investment banks have pointed out that AI is driving up the number of search queries and user participation, bringing medium- to long-term benefits to Google's search business.

On Wednesday, Citizens analyst Andrew Boone raised Alphabet's target price from $340 to $385, implying a 22% increase from Tuesday's closing price of $313.85. Boone said in the research report that AI search is beneficial to the increase in query volume in the short term, and more importantly, continuous iteration of the new model is improving the relevance of answers, thereby further promoting user participation.

Recently, other analysts have also given positive reviews, focusing on the addition of tools such as AI Mode and AI Overview, and the release of Alphabet's latest AI model Gemini 3. TD Cowen analyst John Blackledge gave Alphabet a “buy” rating with a target price of $350. In his December 12 report, he pointed out that the use of AI Mode and Overviews continues to boost search engagement, and at the same time, more and more ChatGPT users are starting to use Gemini.

Evercore ISI analyst Mark Mahaney also maintains an “outperforming market” rating, with a target price of $325. In his December 11 report, he said that AI innovation is creating a better search experience for users, which is expected to translate into “continuous and steady search revenue growth.”

On April 8 this year, Alphabet once fell to a 52-week closing low of $144.7. At the time, the overall market declined due to concerns about US President Trump's tariff plan, and Alphabet itself faced multiple pressures, including regulatory risks, rising AI infrastructure spending, and competition from AI search models such as ChatGPT and Perplexity.

Today, there is a clear shift in Wall Street's views. Boone notes that despite the rise in AI search usage, Google's overall usage has “remained relatively stable.” He believes that as AI Overview and AI Mode cover more search categories and regions, Google has had a “smooth wind for many years” in terms of query volume growth. These tools improve the overall experience by allowing users to ask more complex questions and present the information they need more efficiently at the top of search results.

In terms of stock price performance, Alphabet has accumulated 66% growth this year, clearly outperforming the S&P 500 Index, the Nasdaq Composite Index, and the Dow Jones Industrial Average.

However, as optimism heats up, valuations also soared. The current Alphabet stock price is about 27.9 times the price-earnings ratio corresponding to the expected profit for the next 12 months, which is higher than its average of 21.7 times over the past five years. The market generally believes that whether AI can continue to transform into search and advertising revenue growth will be the key to determining whether its valuation can be further expanded.