Wells Fargo upgrades Google's rating, stating that its AI computing power lead continues to grow

2026-02-23 22:09:20

Investing.com - Wells Fargo upgraded Alphabet’s stock rating to Overweight on Monday, stating in a research report that the company is poised to lead the next phase of artificial intelligence development thanks to its advantages in data, distribution channels, and computing power.

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Analyst Ken Gawrelski wrote that Google demonstrates “the three key traits of AI winners: customer data, distribution channels, and computing power.” The analyst raised Alphabet’s target price from $354 to $387.

The latest computing power analysis from the firm supports this rating adjustment. Wells Fargo stated that its Project Google framework shows computing power “will expand from 15GW at the end of 2025 to 35GW in 2028,” and added that the company is “expanding its lead in computing power relative to its large-scale cloud service peers.”

As long as the ambitions of large-scale cloud providers remain “limited by computing power,” Wells Fargo believes Google will maintain a lasting advantage in cloud services, search, and emerging AI proxy businesses.

The bank significantly raised its forecast for Google Cloud, now expecting GCP revenue to grow 60% year-over-year in 2026, 11% higher than market consensus, with growth rates in 2027 and 2028 exceeding consensus by 16% and 12%, respectively.

The bank also estimates that GCP’s computing power will grow from 7.6GW in 2025 to 16.9GW in 2028. Its cloud business operating income forecasts for 2026 and 2027 are now 10% to 15% higher than Wall Street expectations.

Wells Fargo also highlighted the opportunity for Google to build the Gemini subscription business, which is expected to grow “from $4 billion in annual recurring revenue at the end of 2025 to $12 billion,” as well as the potential upside from its partnership with Apple Siri.

Although the AI search transformation still carries risks, Wells Fargo stated that Google has effectively “kept ChatGPT’s market share around 13% since July 2025,” and search activity is currently expanding.

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