Alphabet’s $600 Case Hinges on Cloud Growth and AI Returns

A $600 share price would put Alphabet roughly 70% above the $352.20 quote used in a September 23 valuation analysis by 24/7 Wall St. The target is not a consensus forecast: analyst Vandita Jadeja’s model puts the base case near $520 and the bull case around $586, with $600 requiring stronger growth and a richer valuation multiple.

The argument starts with Google Cloud, whose revenue rose 82% year over year to $24.8 billion in the second quarter, while its operating margin widened to 35.6%. Alphabet reported total revenue of $119.8 billion, up 24%. Those results suggest AI demand is already feeding a business with paying customers, rather than remaining a promise tied only to future products.

There is a substantial pipeline, too. Alphabet disclosed $513.9 billion in Google Cloud remaining performance obligations at June 30, and said just over half of its total backlog was expected to become revenue over the following 24 months. But backlog is not cash in hand: Alphabet says conversion depends on delivering services and customers’ actual usage.

That distinction matters because the company is spending heavily to meet demand. Second-quarter capital expenditures reached $44.9 billion, and Alphabet lifted its 2026 spending outlook to $195 billion to $205 billion, according to its results and S&P Global’s earnings analysis. S&P also reported management expects investment to rise further in 2027. More servers and data centers can unlock cloud sales, but they also raise depreciation and weigh on cash generation before the payoff arrives.

Jadeja’s $600 scenario implies about 26 times the article’s cited forward earnings estimate of $23.54. The analysis says the stock traded around 15 times that estimate at $352.20; reaching the target therefore depends not just on earnings growth, but investors granting Alphabet a much higher multiple. That is the key leap in the thesis.

The company’s second-quarter EPS also needs context: Alphabet reported $9.11, but its filing attributed much of the sharp rise in net income to a $98 billion net gain, primarily from unrealized gains on equity investments. Meanwhile, continued ad growth, cloud backlog conversion and a meaningful return on AI spending remain essential. If AI features erode search advertising or infrastructure costs outrun monetization, a low-looking earnings multiple may prove less reassuring than it appears.