- Bank of America kept a “buy” rating on Alphabet with a $430 price target
- Gemini monthly active users reportedly surged from 400 million to 900 million
- Google’s AI spending is exploding, but analysts believe the real payoff comes later
Google delivered what many analysts called its strongest I/O event in years, then watched its stock fall roughly 2% anyway. Despite the market reaction, Bank of America maintained its bullish stance on Alphabet, keeping a “buy” rating and a $430 price target that implies around 11% upside from current levels.
According to analysts Justin Post and Nitin Bansal, Google is no longer chasing competitors in AI. The company now appears fully positioned inside the race, with products already scaling at levels most rivals still cannot match.
Google’s AI Numbers Are Starting To Look Massive
The usage data coming out of I/O was difficult to ignore. Google revealed that AI Overviews now reach roughly 2.5 billion users, while AI Mode, its conversational AI search layer, climbed to around 1 billion users and is reportedly doubling every quarter.
That kind of adoption suggests Google’s search ecosystem is transitioning toward AI-native experiences much faster than many expected. Instead of losing relevance during the AI boom, Google appears to be embedding AI directly into the infrastructure of products billions already use daily.
Gemini’s growth also stood out. Monthly active users nearly doubled year-over-year, rising from roughly 400 million to 900 million users. That’s not small-scale experimentation anymore, it’s global platform-level adoption.
The Real Cost Of AI Is Showing Up Now
The bullish story does come with a major catch though. Google’s capital expenditures are expected to surge dramatically, climbing from roughly $91 billion to around $187 billion in 2026 as the company aggressively builds AI infrastructure.
That spending is expected to pressure free cash flow heavily, with projections showing a drop from $73 billion to roughly $44 billion next year. Even Bank of America acknowledged that monetization from AI-powered search experiences has not fully proven itself yet.
In other words, Google is spending enormous amounts now while betting the financial payoff arrives years later.
Wall Street Is Betting On The 2028 Version Of Google
The broader argument from bullish analysts is fairly simple. Google already has the scale, user base, and distribution network needed to dominate AI if execution holds up over time.
The market may be punishing near-term spending pressure today, but firms like Bank of America appear focused on what Google’s AI ecosystem could look like by 2028 once infrastructure buildouts stabilize and monetization improves.
For now, investors seem stuck balancing two realities at once: Google is building some of the largest AI products in the world, but it’s also spending at levels that make immediate returns harder to justify.
