GOOG Stock Is Down 20% From Its High and Wells Fargo Just Called It the Best Buy in Tech — Here Is the Case

On a Tuesday morning, the Mountain View campus still appears to be a place that thinks it will rule the world in twenty years. The bike racks are packed. During lunch, the volleyball courts are in use. Talking about models, compute, and deployment at a volume that suggests they are accustomed to these discussions being background noise, engineers in fleece vests carry cups from the campus cafe between buildings. In the market, Alphabet Inc. has had a difficult few months. On March 27, its Class C shares, which are traded under GOOG, ended the day at $273.76, down almost 2.5 percent and about 20 percent from the fifty-two-week high of $350.15. Those who closely follow the company are now wondering if the selloff has caused a discrepancy between the price of the stock and the true value of the company.

Ken Gawrelski of Wells Fargo says the answer is definitely yes. Gawrelski maintained his “overweight” rating on Alphabet and increased his price target to $297 in a research note dated March 27. This suggests an upside of about 45% from the current price. His logic was based on a number of factors, the most notable of which was Google’s place in the cycle of AI investments. According to his description, Alphabet has “all the pieces necessary to be an AI winner”—a distribution network that no startup can match, industry-leading compute capacity, the Gemini model family, Google Cloud’s rapidly expanding growth, and a significant consumer data advantage. He described the stock at current prices as “coiled spring,” a term that analysts at Wells Fargo do not use lightly.
If you ignore the noise of the current market correction, the financial backdrop lends credence to the optimism. Alphabet produced $127 billion in liquidity and $132 billion in net income in 2025, which was 32% more than in 2024. This year, the company intends to spend between $175 billion and $185 billion on capital expenditures, which is significantly more than most governments spend on infrastructure and shows how quickly Google is developing its AI capabilities. In 2025, Google Cloud, the division that is becoming more and more important to the investment thesis, saw a 36% increase in revenue. A mature, stagnant business would not grow at that rate. It is the rate at which something gains market share in a market that is rapidly growing.

Additionally, the Anthropic deal has not gotten the attention it merits. Google has given Anthropic, the AI safety firm behind the Claude models, access to one million specially made Tensor Processing Units. Google is anticipated to earn $2.5 billion in high-margin revenue from the deal this year and $7.5 billion by 2027. When you include the $32 billion acquisition of Wiz, a cloud security company that gives Google Cloud enterprise-grade security capabilities and makes it significantly more competitive for the large corporate clients that AWS and Microsoft Azure have historically dominated, the cloud story begins to look far more intriguing than the stock price is giving it credit for.
Although there is a legal overhang, it is most likely manageable. In a historic social media addiction case, a Los Angeles jury on March 26 found Google and Meta Platforms negligent and awarded $6 million in damages. Analysts quickly pointed out that the dollar amount is essentially a rounding error for a company worth three trillion dollars. The issue is precedent, or the potential for this decision to spark a wave of similar lawsuits that ultimately compel significant adjustments to YouTube’s engagement design or recommendation algorithms. That worry might be exaggerated. The addiction framing is less applicable to Google than it is to Instagram or TikTok because its primary source of income is search, which is motivated by user intent rather than passive engagement. Wells Fargo made precisely this point, pointing out that Alphabet’s diversification across search, cloud, and enterprise software makes it uniquely insulated among the social media names.
The launch of the Pixel 10a, on the other hand, garnered attention for a reason unrelated to the stock that reveals Google’s perspective on its product line. This cycle, the phone’s most notable feature is not a faster chip or a more potent camera, but rather the complete removal of the camera bump, which results in a flat back for the first time in many years. With a 5,100 mAh battery, a 3,000 nit display, and a seven-year software support guarantee, this $499 gadget is meant to be useful rather than spectacular. Doing the unglamorous thing well is a design philosophy that is somewhat similar to GOOG’s current investment case.
It is difficult to ignore the fact that the company’s cloud business is expanding at a rate of 36% per year, its stock is trading at about 25 times trailing earnings, and it has more cash on hand than the majority of nations. As this develops, it appears that the market’s general anxiety—the Iran war, the tech correction, and the concerns about AI disruption affecting software—has caused GOOG to decline along with stocks whose issues are far more structural. Your belief about where AI compute revenue will go over the next three years and whether Google’s investments in Gemini, Cloud, and Waymo eventually show up on the income statement in a way that the current valuation does not reflect will determine whether or not that presents an opportunity. The bear case is not absurd. However, there is more evidence to support the bull case at $273 than the price indicates.