Alphabet Inc. (NASDAQ:GOOGL) is among the The best software infrastructure stocks to buy according to hedge funds.. On January 5, Jefferies reaffirmed its Buy rating but raised its price target on the stock from $320 to $365.
According to the update, there were a number of factors that bolstered Jefferies’ positive case, and the first of these was the “unparalleled data moat” that Alphabet Inc. (NASDAQ:GOOGL) has. Another factor was the company’s ability to maintain Gemini’s dominant position. The firm believes this is well supported by Alphabet’s broad product ecosystem, which includes seven platforms with more than 2 billion monthly active users each.
Jefferies expects net income growth to moderate to about 13% in 2026, following two years of growth of about 15%. However, operating leverage is expected to remain intact, with operating margins expected to expand approximately 140 basis points to around 39%. This should partially offset slowing growth and support earnings. Additionally, the firm forecasts that Google Cloud will maintain growth of more than 30% through 2026, driven by continued outperformance of Google Cloud Platform.
Despite Alphabet’s 2026 EV/EBITDA valuation of 17.6 times, near its 15-year high, Jefferies analysts believe the company’s strong earnings growth should justify a higher valuation. In a bullish scenario, they argued that their multiples could expand to reach the valuation they had before the global financial crisis.
Alphabet Inc. (NASDAQ:GOOGL) is the parent company of Google and a pioneer in Internet-related services and products, including online advertising technologies, search engines, cloud computing, software and hardware.
While we recognize GOOGL’s potential as an investment, we believe certain AI stocks offer greater growth potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that’s also benefiting significantly from Trump-era tariffs and the offshoring trend, check out our free report on best short-term AI stock.
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Disclosure: None. This article was originally published in Internal jumpsuit.