Key Stats for Alphabet Stock
- Current Price: $342.36
- Target Price (Mid): ~$640
- Street Target: ~$430
- Potential Total Return: ~87%
- Annualized IRR: ~16% / year
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What Happened?
Alphabet (GOOGL) closed at $337.83 on September 23 after two competitive threats landed in the same week. Meta Platforms shares jumped 11% on September 21 as its Muse assistant climbed to the top of Apple’s U.S. App Store, and on September 22, OpenAI and Anthropic cut prices on their newest models. Coverage tied Alphabet’s decline to the Muse fear, and other reports also pointed to the price cuts.
Shares rose 1.34% to $342.36 on September 24, about 15% below their 2026 closing high. On September 8, at Goldman Sachs’ Communacopia conference, Google Cloud CEO Thomas Kurian laid out chip economics that bear directly on a price war.
Muse Is Chasing a Search Franchise Evercore Says Is Gaining Share
Meta’s chief AI officer, Alexandr Wang, said Muse can connect with Gmail, Google Calendar and Google Docs. On September 22, the same fear hit banks, insurers and online travel stocks. In the month to September 23, Meta gained 34% while Alphabet slipped around 1%, according to Invezz.
The fear is that an agent acting for a user never types a query, and queries are what Google’s ad business sells. In mid-September, Evercore ISI’s Mark Mahaney raised his target to $450 from $420 after his firm’s survey found 78% of respondents named Google their primary search engine in August 2026. That was up from a low of 70% in 2024 and early 2025, and Search revenue grew 17% in Q2.
Mahaney told CNBC that Gemini sits within roughly three points of ChatGPT when consumers are asked about AI agents. He also said Google must strengthen its Gemini Spark offering as Meta launches AI products. The survey covers August, before Muse reached the top of the App Store, so it measures the position Muse is attacking rather than the result.
On September 2, a federal judge declined to force Google to sell its ad exchange, ordering behavioral remedies in the ad-tech antitrust case Google had lost.
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Kurian’s Chip Math Meets the Price War
OpenAI’s GPT-6 Sol and Luna cost half as much per token as their GPT-5.6 predecessors. Google has priced aggressively too: it cut its AI Ultra plan from $250 to $200 a month at I/O in May.
On September 8, Kurian said Google offers “2.7x better price performance for training, 80% better price performance for inference”. He did not name the baseline, which could be rival chips or Google’s own prior generations. These are management claims, not audited benchmarks.
He also gave a return figure: “our payback period on AI servers in aggregate is less than 2 years, and on our own silicon is half that.” By his account, Google’s own chips recover their cost in under a year. He did not say whether payback is measured on revenue or profit, and Alphabet does not report the figure.
Kurian said customers can buy TPU systems outright for their own data centers, which requires no data-center capex from Google. They can also use a Neocloud Google set up with Blackstone. He added that most infrastructure contract value sits in committed five-year deals.
Part of the price war also runs on Google hardware. Anthropic secured access to up to one million Google TPUs in October 2025 and signed for multiple gigawatts more starting in 2027, while thousands of customers reach Claude through Google Cloud. Anthropic also runs on AWS Trainium and Nvidia GPUs, and Amazon is its primary cloud provider. Google shares in any usage lift, and it does not disclose what the relationship earns.
The stakes are large. Alphabet guided 2026 capex to $195 billion to $205 billion, and TIKR consensus puts 2027 free cash flow around negative $32 billion.
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TIKR Advanced Model Analysis
- Current Price: $342.36
- Target Price (Mid): ~$640
- Potential Total Return: ~87%
- Annualized IRR: ~16% / year
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The mid case is more conservative than the Street on growth. It assumes around 17% annual revenue growth, while consensus implies around 19% a year from 2025 to 2030, and its net margin of around 31% matches consensus.
Two drivers carry that growth: Google Cloud converting its $514 billion backlog, and Search holding double-digit growth against agents like Muse. The margin driver is the TPU price-performance, Kurian claimed. The primary risk is depreciation.
The Street’s mean target is around $430, with 43 Buy, 13 Outperform, 5 Hold, 0 Underperform and 0 Sell ratings. On the upside, consensus already expects free cash flow to recover to around $136 billion by 2029, and Kurian’s payback figure is the argument for trusting that path. On the downside, if agents slow Search and the price war forces deeper Gemini cuts, the forward P/E of 25.6x as of September 24 could compress faster than the model assumes.
Conclusion
Alphabet’s Q3 report is expected in late October, with consensus at around $127 billion in revenue, roughly 24% growth. Search is the first read: growth near Q2’s 17% would mean Muse has not dented queries, while a clear slowdown would support the September 23 sellers. Pricing is the second read, because a Gemini price cut paired with slower Cloud growth would be the first real test of Kurian’s payback claim.
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Should You Invest in Alphabet?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
