Bank of America resets Google stock forecast after key event

Alphabet (GOOGL) has the most popular search engine, is a hyperscaler, and is one of the best-positioned companies in the artificial intelligence race.

The stock is up about 22.85% year to date, at the time of writing, Friday morning, May 22, according to Yahoo Finance. Meanwhile, the SPDR S&P 500 index (SPY) is up about 8.92% in the same period.

Key recent news for GOOGL stock:Google has signed a deal to provide the Pentagon with its AI models for classified work, The New York Times reported.On April 22 at Google Cloud Next, the company unveiled its eighth generation of custom Tensor Processor Units (TPU).Alphabet said it will invest up to $40 billion in Anthropic, reported Reuters.Google reported very strong Q1 earnings on April 29.

In anticipation of Google I/O, Bank of America said the conference “could strengthen confidence in AI positioning.” But expectations are high, BoA also noted, and there’s a near-term risk that a lack of a “wow” announcement could pressure the stock.

The conference is over, so let’s see whether Google delivered and what Bank of America thinks.

Key announcements from Google I/OGoogle unveiled the Gemini 3.5 line of models, starting with the 3.5 Flash. It launched Gemini Omni, a new model that it says can create “anything” from any input, starting with video.Search’s AI mode has been upgraded to Gemini 3.5 Flash.Google unveiled its “24/7 personal AI agent,” Gemini Spark.The company upgraded its AI coding platform with the release of Antigravity 2.0.The company said a new standalone desktop application delivers on an agent-optimized experience. It allows orchestrating multiple agents to execute tasks in parallel.Google launched Universal Cart, an “intelligent shopping cart.” It works across merchants and services, enabling users to add items to their cart while browsing Search, chatting with Gemini, watching YouTube, or reading Gmail.The company shared more details about its intelligent eyewear. There will be two types of intelligent eyewear: audio glasses that provide spoken guidance in your ear and display glasses that show information. Audio glasses are launching first and are expected this fall.

Bank of America says Google is taking the lead in consumer AI experiences.

Pawel Czerwinski/Unsplash

Bank of America says Google is taking the lead in consumer AI experiences

In a research note shared with me, Bank of America analyst Justin Post and his team shared their opinion on Alphabet stock and Google I/O announcements.

“Gemini Flash’s cost and speed advantages could further drive both consumer adoption of Google products, and Cloud customer wins from potential cost savings offered by the model,” Post wrote.

The team noted the successful ramp of AI Overviews, which is at 2.5 billion users. Combined with AI Mode at 1 billion users and Gemini adoption, the ramp shows that Google is successfully pushing Search users toward AI-native experiences.

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The analysts view this as the company reducing the risk of competitive disruption.

While the new intelligent Search interface and Gemini 3.5 integration could increase search utility and engagement and boost query growth, analysts are unsure of whether monetizing AI queries can materially exceed search revenue.

The team believes the smart glasses could potentially emerge as a next-generation computing platform.

They noted that the new line of smart glasses puts Google in direct competition with Ray-Ban Meta Smart Glasses. Analysts said that since the specifications for the camera type and battery life of the glasses were not announced, this suggests Google still has work to do before release.

Post reiterated a buy rating for Alphabet, with a price target of $430, based on a 28 multiple of his estimate for core Google GAAP EPS for 2027 plus cash per share.

He notes that Alphabet has traded at an average multiple of 22x GAAP price-to-earnings ratio over the last 10 years. However, he believes the multiple is reasonable, given expectations for double-digit revenue growth, Cloud margin expansion, and the opportunity to capitalize on strong AI assets.

Analysts noted downside risks for Alphabet stock:Loss of search traffic to AI tools from competitorsLLM integration in search takes longer than expectedRevenue pressure from compliance with the EU Digital Markets ActPotential for increasing capex and lower FCF, given AI investments

What do other analysts think, and how does Bank of America’s opinion compare? According to TipRanks, 27 of the 32 analysts covering Google stock rate it a buy. Five give a hold rating. The average price target is $428.06.

Key takeawaysGoogle I/O 2026 introduced the Gemini 3.5 Flash model and the 24/7 background agent, Gemini Spark.BofA maintains a buy rating and a $430 price target based on a 28x multiple of 2027 core GAAP EPS estimates.Analysts remain cautious about whether AI query monetization can outpace legacy search ad revenue margins.

Related: Bank of America revamps Nvidia stock price target after earnings

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