Google Stock Is Up 70%, But One Analyst Says The AI Rally Is Just Beginning

Core Insights - Alphabet is positioned for continued growth due to advancements in artificial intelligence enhancing its Search business and preparing its Cloud platform for acceleration with new data center capacity [1] Group 1: Stock Performance and Analyst Outlook - JMP Securities analyst Andrew Boone reiterated a Market Outperform rating for Alphabet with a price forecast of $290 [2] - Boone noted that Alphabet's stock has significant room for growth, even after a 70% surge in the last six months, attributing this potential to AI advancements [3] - The analyst predicts strong third-quarter 2025 results that will exceed consensus estimates [3] Group 2: Search Division and User Engagement - Boone argues that Google's Search division remains healthy, with AI Overviews driving greater query growth and outperforming ChatGPT in commercial queries [4] - Increased user visits and app sessions indicate that AI is expanding the search market by better understanding user intent beyond simple keywords [4] Group 3: Cloud Business and Revenue Projections - Optimism surrounds Google Cloud, expected to boost 2026 revenue estimates due to substantial data center capacity coming online by 2025 [5] - Google's custom silicon (TPUs) and vertical integration provide a cost advantage, allowing it to capture a larger share of cloud budgets from top AI labs and startups [5] - The market perception of Google has shifted from an "AI loser" to an "AI winner" over the past six months [5] Group 4: Future Developments and Earnings Estimates - The anticipated release of Google's next-generation model, Gemini 3.0, by 2025 is expected to provide additional momentum [6] - Current earnings estimates for Google are considered conservative compared to peers like Meta Platforms Inc [6] - Boone projects third-quarter revenue of $100.06 billion and EPS of $2.30 [6]