Key Takeaways
- Alphabet shares retreated approximately 4% following news that Gemini 3.5 Pro has been postponed after underperforming internal performance standards
- First-quarter FY2026 earnings per share reached $5.11 versus the $2.63 forecast — beating expectations by 94% — while revenues climbed 21.8% to $109.90B
- Wedbush launched coverage with the highest Wall Street price objective at $671, viewing the pullback as an attractive entry point
- BMO Capital analyst Brian Pitz increased his price objective to $455 from $435, maintaining his Buy recommendation
- Among 64 analysts tracking GOOGL, 57 assign it Buy or Strong Buy ratings, with no Sell recommendations
Alphabet (GOOGL) stock finished Friday’s session at $354.46, declining approximately 4.44% from its opening price near $373. The catalyst: emerging reports indicating Google’s Gemini 3.5 Pro artificial intelligence model has been delayed following its failure to satisfy internal performance thresholds.
The decline occurred despite Alphabet delivering what ranks among its most impressive quarterly performances in recent memory. First-quarter FY2026 earnings per share hit $5.11, essentially doubling the $2.63 analyst consensus — representing a remarkable 94% earnings beat. Total revenue reached $109.90 billion, marking a 21.8% increase year-over-year.
Google Cloud emerged as the quarter’s standout performer, expanding 63% to reach $20.03 billion while its backlog nearly doubled from the previous quarter. The current backlog now stands at an impressive $460 billion.
The artificial intelligence talent narrative added additional downward pressure to shares. Gemini co-leader Noam Shazeer made a surprise return to OpenAI after a brief stint back at Google following the Character.ai acquisition. Meanwhile, Nobel Prize winner John Jumper left DeepMind to join Anthropic. These high-profile departures amplified concerns about Google losing ground in the AI development race.
Despite these concerns, Wall Street analysts maintained their conviction.
Wedbush Establishes Industry-Leading Price Target
Wedbush analyst Ygal Arounian launched coverage Thursday with a Buy recommendation and an industry-leading $671 price objective. Arounian characterized the postponement as a “temporary blip” and positioned the sell-off as a strategic buying opportunity.
A move to $671 would represent approximately 90% appreciation from current trading levels.
BMO Capital’s highly-rated analyst Brian Pitz maintained his bullish stance as well. He reaffirmed his Buy rating and elevated his price target to $455 from $435, pointing to improved Google Cloud projections for Q4 and FY2027, increased by 2% and 13% respectively. Pitz attributed the adjustment to expanding infrastructure capacity and sustained enterprise cloud adoption.
The analyst consensus price target currently stands at $437.79, suggesting approximately 26% upside potential from Friday’s closing price. One particularly optimistic projection of $515 implies potential gains of up to 45%.
Berkshire’s Investment and Tech Sector Weakness
Friday’s downturn wasn’t isolated to Alphabet alone. The broader technology sector experienced selling pressure, with AI-focused stocks bearing the brunt. META declined 3.19%, MSFT fell 2.14%, and NVDA slipped 1.17%. Alphabet’s sharper decline suggests the Gemini-specific headlines amplified the broader market weakness.
Warren Buffett, operating now under successor Greg Abel’s leadership, disclosed that Berkshire Hathaway established an Alphabet position through a $10 billion private placement transaction. Buffett identified AI-related capital spending as the primary risk factor worth monitoring — Alphabet’s capital expenditure trajectory reduced free cash flow by 46.63% year-over-year during Q1.
Friday’s trading volume registered at 10.79 million shares, considerably below the three-month average of 34.05 million.
Despite Friday’s decline, GOOGL maintains a year-to-date gain of 11.11% and has surged 91.54% over the trailing twelve months.
Among 64 analysts providing coverage: 14 rate it Strong Buy, 43 rate it Buy, 7 rate it Hold, with zero Sell ratings.
