Alphabet Inc. (GOOGL) still looks like a company built to win the AI era. Cloud is humming, monetization options are multiplying, and the distribution advantages are hard to argue with. The problem, as always, is the bill. Softer Search trends, heavy capital spending and near-term margin pressure are the concerns that just won't go away.

BNP Paribas analyst Nick Jones kept an Outperform rating on Alphabet but trimmed his price forecast to $410 from $450. His reasoning: weaker Search trends and expected margin pressure as the company expands third-party bridge capacity.

Cloud Strength Offsets Search Weakness

Jones called the third-quarter results mixed, and that's a fair label. Revenue reached $127.6 billion, roughly in line with consensus. Google Services revenue of $96.3 billion came in about 2% below expectations.

Google Cloud revenue reached $30.7 billion, about 6% above consensus. But operating income of $40.6 billion landed roughly 6% below expectations, and diluted EPS of $2.12 fell well short of Street estimates. Capital expenditures totaled $51.4 billion, about 8% below consensus.

Capex to Rise in 2027

Jones noted that Alphabet maintained its 2026 capex guidance of $195 billion to $205 billion and plans a significant increase in 2027. That's the part that makes investors nervous. He expects near-term margin pressure as Alphabet adds bridge capacity and utilization ramps.

Jones also said Alphabet's expanding TPU resale strategy is becoming increasingly important as partnerships grow, though the near-term margin impact remains unclear.

Cuts 2026-2027 Estimates

Jones lowered his 2026 and 2027 revenue estimates to reflect Search softness, partly offset by stronger Cloud performance. He also reduced his bottom-line estimates for those years to incorporate the third-quarter results and expected near-term margin pressure. His estimates for 2028 and beyond remain largely unchanged.

Then came the multiple cut: down to 24 times estimated 2028 earnings from 26.5 times, which lowered his price target to $410.

Despite the estimate reductions, Jones said Alphabet remains well positioned in AI, supported by its Search scale, distribution advantages, Cloud momentum and expanding monetization opportunities.

Ives Sees Cloud and AI Capacity Driving Growth

Yorkville Ives analyst Dan Ives maintained an Outperform rating and a $400 price forecast, with Google Cloud at the center of his thesis.

Ahead of the quarter, Ives expected Alphabet to generate about $128 billion in revenue, with Cloud revenue of $29.1 billion and Search and other revenue of $64.9 billion.

He also highlighted Alphabet's $514 billion Cloud backlog and custom AI chips as longer-term growth drivers, with most revenue from existing chip agreements expected to arrive in 2027.

Ives expects Alphabet's capital spending to rise toward roughly $315 billion in 2027 as the company adds capacity to meet contracted AI demand. He views that spending as necessary while Cloud demand continues to exceed available infrastructure.

Ives said sustained Cloud growth, continued backlog expansion and high-single-digit paid-click growth would help show that Alphabet can scale AI investment without materially weakening Search monetization.

GOOGL Price Action: Alphabet shares were down 12.36% at $284.72 at the time of publication on Thursday, according to market data.