JPMorgan analyst Doug Anmuth is putting his money where his mouth is on Alphabet Inc. (GOOGL) and Alphabet (GOOG), reiterating an Overweight rating and a $395 price target in a research note Monday. More importantly, he's named the tech giant a "Top Pick" just days before its Google Cloud Next event kicks off in Las Vegas. It's a bold call, essentially saying: pay attention to this one.

So, why the confidence now? Anmuth highlighted that Google Cloud has become Alphabet's second-largest business, and JPMorgan expects it to make up roughly 19% of total revenue in 2026. That's not just a side hustle anymore. The analyst pointed to a staggering cloud backlog, which ballooned 160% year-over-year to $240 billion by late 2025. "While Cloud Next has not been a major catalyst for GOOG/L shares in the past, we believe the event carries more weight this year," Anmuth wrote. In other words, the stakes are higher because the cloud business is bigger and more central to the story.

The "Agentic" Shift: Making Cloud Services Stickier

JPMorgan expects the upcoming conference to be all about what it calls the "Agentic Cloud." This isn't just another buzzword—it refers to AI agents that can coordinate multi-step workflows automatically. Think of it as moving from tools you use to an assistant that does the work for you. Anmuth believes this shift is crucial because these AI agents make Google Cloud usage "recurring & much harder for customers to rip out." Once you've got an AI managing your complex processes, switching providers becomes a much bigger headache. This "stickiness" is a big part of why JPMorgan is bullish on margin expansion, modeling cloud operating margins to hit 27.9% in 2026. That's impressive growth, especially considering the company is pouring money into infrastructure.

Spending Big to Win Big

And pour money it does. Alphabet's capital expenditure guide for 2026 sits between $175 billion and $185 billion. That's a colossal sum, even for a tech behemoth. But Anmuth sees strategic sense in the spending, pointing to recent acquisitions that bolster Google's position. The $32 billion deal for cybersecurity company Wiz signals that security is a "top strategic priority," which is non-negotiable for cloud clients. Meanwhile, the $4.75 billion acquisition of Intersect Power, which provides solar and battery storage, helps Google bypass grid congestion—a smart move for ensuring reliable, clean energy for its data centers. These aren't random buys; they're chess moves on the cloud board.

As of Monday, Alphabet shares were down 0.86% at $338.73. But if JPMorgan's thesis is right, the real action to watch will be in Las Vegas, where Google lays out its vision for an AI-powered cloud that customers can't easily leave.