TLDR
- GOOGL dropped ~4% after reports that Gemini 3.5 Pro is delayed due to failing internal benchmarks
- Q1 FY2026 EPS came in at $5.11 vs a $2.63 estimate — a 94% beat — with revenue up 21.8% to $109.90B
- Wedbush initiated coverage with a Street-high $671 price target, calling the dip a buying opportunity
- BMO Capital’s Brian Pitz raised his price target to $455 from $435, reiterating a Buy rating
- Of 64 analysts covering GOOGL, 57 rate it Buy or Strong Buy, with zero Sell ratings
Alphabet (GOOGL) stock closed at $354.46 on Friday, down roughly 4.44% from an open near $373. The trigger: reports that Google’s Gemini 3.5 Pro model has been pushed back after failing to meet internal benchmarks.
The drop came despite what was one of Alphabet’s strongest earnings quarters in years. Q1 FY2026 EPS landed at $5.11, nearly double the $2.63 consensus estimate — a 94% beat. Revenue came in at $109.90 billion, up 21.8% year over year.
Google Cloud was the standout, growing 63% to $20.03 billion with its backlog nearly doubling quarter over quarter. That backlog now sits at $460 billion.
The AI talent angle added pressure to the stock. Gemini co-lead Noam Shazeer returned to OpenAI after briefly rejoining Google through the Character.ai acquisition. Nobel laureate John Jumper also departed DeepMind for Anthropic. Both exits fed concern that Google’s AI pipeline is slipping.
That said, Wall Street didn’t blink.
Wedbush Sets the High Bar
Wedbush analyst Ygal Arounian initiated coverage on Thursday with a Buy rating and a $671 price target — the most aggressive on the Street. Arounian called the delay a “temporary blip” and framed the sell-off as a buying window.
At $671, that would represent close to 90% upside from current levels.
BMO Capital’s five-star analyst Brian Pitz also held firm. He reiterated a Buy and lifted his price target to $455 from $435, citing stronger Google Cloud estimates for Q4 and FY2027, up 2% and 13% respectively. Pitz pointed to expanding capacity and robust cloud demand as the reason for the revision.
The consensus price target across analysts sits at $437.79, implying roughly 26% upside from Friday’s close. One outlier target of $515 suggests as much as 45% upside.
Berkshire and the Broader Selloff
Friday’s drop wasn’t limited to Alphabet. The wider tech sector sold off, hitting AI-heavy names hardest. META fell 3.19%, MSFT dropped 2.14%, and NVDA slid 1.17%. GOOGL’s decline was steeper than peers, suggesting the Gemini headline added fuel.
Warren Buffett, now under successor Greg Abel, confirmed Berkshire Hathaway took a position in Alphabet through a $10 billion private placement. Buffett flagged AI capital expenditure as the key risk to watch — Alphabet’s capex outlook cut free cash flow by 46.63% year over year in Q1.
Trading volume on Friday came in at 10.79 million, well below the three-month average of 34.05 million.
Despite the day’s move, GOOGL remains up 11.11% year-to-date and 91.54% over the past 12 months.
Of 64 covering analysts: 14 Strong Buy, 43 Buy, 7 Hold, zero Sells.
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