Oppenheimer raised its price target on Alphabet Inc (NASDAQ:GOOG) to $220 from $200, citing strong consumer adoption of the tech giant's AI Mode and a bullish valuation outlook for its self-driving unit Waymo.
The brokerage, which reiterated its "Outperform" rating, said a recent survey of US adults showed Alphabet's AI Mode is increasingly seen as superior to both traditional Google Search and OpenAI’s ChatGPT among users familiar with the technology.
Among "knowledgeable" respondents, 66% found AI Mode results more helpful than Google Search, while 60% rated them better than ChatGPT. Notably, 75% of ChatGPT payers preferred AI Mode, Oppenheimer said.
Oppenheimer added that AI Mode’s integration with real-time search queries and frequent link engagement — with 53% of knowledgeable users clicking links often or very often — could reinforce Alphabet’s dominance in digital advertising. The firm said Google’s Gemini app also showed “surprisingly good traction,” with 65% usage among respondents compared to 76% for ChatGPT and 39% for Meta AI.
The brokerage also assigned a base case valuation of $300 billion to Waymo, Alphabet’s autonomous driving unit, based on expectations for the unit to generate $100 billion in EBITDA by 2040. Oppenheimer said this valuation implies Alphabet's core Search business is currently trading at just 6.2 times estimated 2025 EBITDA — a level it sees as overly discounting AI-related risks.
Oppenheimer’s new $220 price target assumes a 21-times multiple on Alphabet’s forecast 2026 earnings per share, compared with peer Meta Platforms’ 23-times valuation.