Goldman Sachs has decisive message on Google stock ahead of earnings
Alphabet reports Q1 2026 earnings on April 29 after the close. Wall Street is watching two things above everything else: whether Google Cloud can sustain 50%-plus revenue growth, and whether Alphabet's massive AI capital spending is starting to pay off in margins.
Goldman Sachs just told investors exactly where it stands on both questions. And its answer is more bullish than consensus suggests.
Goldman Sachs explains Buy rating on Alphabet stock
In a research note shared with TheStreet, Goldman Sachs analysts Eric Sheridan, Alex Vegliante, and Aarshiya Sachdeva reiterated a Buy rating on Alphabet with a 12-month price target of $400. At the time of writing, Alphabet's stock was at $339.32, making the target roughly 18% above the current share price.
Goldman Sachs has held a Buy rating on Alphabet continuously since September 12, 2021. The April note was triggered by the Google Cloud Next 2026 conference in Las Vegas, where Alphabet spent two days unveiling new products and services across infrastructure, data management, security, and the Gemini Enterprise platform.
The firm's core message is that the market may still be underestimating the importance of Google Cloud to Alphabet's overall financial profile.
Goldman Sachs describes this as a "dual under-appreciated narrative": Alphabet has both the compute scale to build the best AI infrastructure and the user distribution at scale to monetize it at the platform and application layers.
What Google Cloud Next revealed about Alphabet's AI strategy
The Cloud Next announcements gave Goldman Sachs additional conviction. Alphabet unveiled a vertically integrated AI stack across four pillars, according to Google Cloud.
On infrastructure: 8th-generation TPUs (TPU 8t for training, TPU 8i for inference), Nvidia Vera Rubin NVL72 availability on Google Cloud, and a new Virgo Network architecture.
On data: the Knowledge Catalog, Data Agent Kit, and Cross-Cloud Lakehouse for multi-cloud data access.
On security: the AI-Application Protection Platform, built on the Wiz acquisition that closed on March 11.
On the platform layer: the Gemini Enterprise Agent Platform with access to Gemini 3.1 Pro, Veo 3.1 Lite, and Lyria 3 Pro, plus an Agent Marketplace and Agent Gateway.
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Three additional disclosures stood out.
Alphabet revealed that 75% of new code written internally at Google is now AI-generated, up from 50% in late 2025. It announced a partnership with Apple as the cloud provider developing next-generation Apple foundational models and a more personalized Siri. And migration from Microsoft 365 to Google Workspace is now reportedly five times faster than before, according to Alphabet IR.
Goldman Sachs's financial forecasts for Alphabet
Goldman Sachs expects Alphabet to generate total revenue of $407.3 billion in 2026, representing 18.8% year-over-year growth. That rises to $472.3 billion in 2027 and $541 billion in 2028. EBIT margins are expected to expand from 37.6% in 2025 to 38.1% in 2026 and 39.2% by 2028.
For Google Cloud specifically, Goldman Sachs projects revenue growth of 51% in 2026, 34% in 2027, and 28% in 2028. Cloud EBIT margins are expected to expand from 25.4% in 2026 to 27.9% in 2027 and 29.9% in 2028. Goldman Sachs views sustained topline growth at high incremental margins in the Cloud segment as the key proof point for Alphabet's broader AI investment thesis.
Alphabet's market cap stands at $4.1 trillion. Goldman Sachs sees the stock at a forward P/E of 31.9x for 2026, declining to 27.2x in 2027 and 23.4x in 2028 as earnings grow into the multiple.
Key figures from Goldman Sachs's Alphabet outlook:
- Goldman Sachs rating: Buy, 12-month price target $400
- Alphabet stock price at note date: $339.32, implying 17.9% upside to the target
- Alphabet market cap: $4.1 trillion, according to Alphabet IR
- Goldman Sachs 2026 revenue forecast: $407.3 billion, up 18.8% year-over-year
- Goldman Sachs 2027 revenue forecast: $472.3 billion
- Google Cloud revenue growth forecast: 51% in 2026, 34% in 2027, 28% in 2028
- Google Cloud EBIT margin forecast: 25.4% in 2026, 27.9% in 2027, 29.9% in 2028
- Alphabet FY2026 capex guidance: $175 billion to $185 billion, majority allocated to ML compute for Cloud, according to Alphabet IR
- Wall Street Q1 2026 consensus: revenue $106.9 billion, EPS $2.63 to $2.73, according to S&P Global
- Google Cloud Q1 2026 consensus estimate: $18.4 billion, up 50.1% year-over-year, according to Bitget
- Alphabet 12-month stock performance: up 124%, versus S&P 500 up 66%, according to Alphabet IR
Alphabet capex and Google Cloud margin debate
One of the most important investor debates surrounding Alphabet right now is capex. Alphabet has guided for $175 billion to $185 billion in total capital expenditure for fiscal 2026, with the majority allocated to ML compute for Cloud. That figure has increased more than fivefold from $32.3 billion in 2023, according to S&P Global.
Goldman Sachs says the key debate is not just the total level of spending, but how efficiently Alphabet allocates it across segments. The firm sees Cloud backlog momentum and improving incremental margins as the evidence that the spending is working. If Alphabet can show those trends accelerating, the capex concern becomes a secondary issue rather than a valuation overhang.
Google Cloud's operating margin expanded from 20% to 27% between October 2025 and the Q1 2026 pre-earnings period, according to S&P Global. Goldman Sachs expects that expansion to continue, which would directly support Alphabet's EPS trajectory even as headline spending levels remain elevated.
What to watch in Alphabet Q1 2026 earnings on April 29
Goldman Sachs highlighted several upcoming catalysts beyond the April 29 earnings report itself. Google I/O, Google Marketing Live, and YouTube Brandcast are all scheduled through the end of May. Goldman Sachs expects each event to reinforce Alphabet's AI exposure across the infrastructure, platform, and application layers of the AI monetization stack.
For the April 29 report specifically, Goldman Sachs and the broader analyst community are focused on three numbers. Google Cloud revenue relative to the $18.4 billion consensus. Operating margin trajectory, where any expansion signals that Alphabet's AI investments are generating returns faster than costs. And advertising performance, particularly in Search and YouTube, where Gemini integration is expected to support continued monetization strength.
Goldman Sachs's message to investors ahead of April 29 is consistent with the position it has held since September 2021: Alphabet remains one of the best-positioned companies in the AI cycle, Google Cloud is becoming a more important part of that story than the market appreciates, and the $400 price target reflects confidence that Alphabet's earnings power will keep growing into and beyond 2028.
Related: Bank of America resets Google stock forecast ahead of earnings
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This story was originally published April 28, 2026 at 5:37 PM.