Is Investing in Google Shares a Smart Move as They Reach Record Highs in January 2026?

U.S. Markets Kick Off 2026 With Tech-Led Gains

American stock markets began 2026 with impressive momentum, as leading indexes and technology shares soared. Both the S&P 500 and Dow Jones reached new record highs in early January, fueled by persistent excitement around artificial intelligence and tech sector giants. Major technology companies spearheaded this surge, with even established players like Alphabet (GOOG, GOOGL) taking center stage.

Alphabet, Google’s parent company, achieved fresh record highs on Thursday after Cantor Fitzgerald upgraded its rating, dubbing it the “king of all AI trades.” The optimistic outlook highlights Alphabet’s comprehensive presence in the AI landscape, spanning everything from data centers and proprietary chips to advanced language models and consumer-facing products.

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With artificial intelligence now deeply integrated into search, cloud, and advertising, investors are left to ponder: Is Alphabet still a smart buy at these historic highs? Let’s explore further.

Alphabet’s Recent Stock Performance

Alphabet, the parent of Google, oversees a broad range of technology businesses. It commands the online search and advertising space, and also owns YouTube, Android, Google Cloud, and a collection of innovative ventures like Waymo. With a market capitalization approaching $3.9 trillion, Alphabet’s dominance is reinforced by its extensive data resources, the Android platform, and robust cloud infrastructure.

In 2025, Alphabet’s share price climbed by nearly 67% year-over-year, vastly outperforming the S&P 500 and earning a spot among the top “Magnificent Seven” stocks. This impressive run was powered by strong growth in advertising and cloud services, as well as investor enthusiasm for Google’s AI initiatives.

However, Alphabet’s shares now trade at a premium. The company’s trailing price-to-earnings ratio is about 30, well above the Communication Services sector median of 18. Its price-to-sales ratio is also elevated at 10, compared to the sector’s typical mid-single-digit range. The PEG ratio stands near 1.8, reflecting high expectations for future growth.

Alphabet Reaches New Heights

On January 8, Cantor Fitzgerald raised its rating on Alphabet to “Overweight,” citing the company’s robust AI investments. The stock responded by hitting a new intraday record of approximately $330.54, rising 1.1% during midday trading and extending its multi-month rally. This upgrade, along with other recent positive analyst calls, highlights Wall Street’s confidence in Google’s AI-driven prospects.

Alphabet’s Q3 2025 Earnings: A Closer Look

Alphabet delivered outstanding results for the third quarter of 2025, surpassing analyst expectations and reinforcing the bullish case for the stock.

Quarterly revenue reached $102.35 billion, marking a 16% increase from the previous year, with growth evident across all segments. Google Services — including Search, YouTube, and advertising — generated $87.05 billion, up 14%. Google Cloud continued to shine, posting $15.16 billion in revenue, a 34% jump, as enterprise demand remained robust.

Profitability was also strong. Net income surged 33% year-over-year to $34.98 billion, and earnings per share rose 35% to $2.87 (GAAP).

Alphabet’s cash generation remained healthy, with free cash flow totaling about $24.5 billion for the quarter, supported by solid operating cash flows despite high capital expenditures.

CEO Sundar Pichai commented, “Alphabet had an exceptional quarter, achieving double-digit growth in every major business segment and delivering our first-ever $100 billion quarter.” While the company did not provide formal guidance for Q4, management highlighted continued momentum in Cloud and increased full-year capital spending. Capital expenditures for 2025 are now projected at $91 to $93 billion, reflecting significant investment in data centers and AI hardware.

Analyst forecasts suggest further gains ahead. On average, Wall Street expects full-year 2025 EPS to reach around $10.58, up from $6.53 in 2024, indicating ongoing double-digit profit growth.

Key Recent Developments

Over the past two months, Alphabet has been active on several fronts. In December, the company announced a $4.75 billion acquisition of Intersect Power, a firm specializing in renewable energy and data center infrastructure. This move aims to secure more clean energy and boost capacity for Google’s cloud and AI data centers.

Regulatory scrutiny also remains in focus, with the European Union set to rule by February 10 on Alphabet’s proposed $32 billion acquisition of Wiz, a cybersecurity company. The deal has already cleared U.S. regulators, but any conditions imposed by the EU could impact Google’s cloud and cybersecurity strategy.

On the product side, Alphabet continues to expand AI features throughout its ecosystem. For example, Google has introduced Gemini-powered AI tools in Gmail for its 3 billion users, including new “AI Overviews” for email summaries and automated writing features, all designed to enhance user engagement and drive ad and Workspace revenue. YouTube and Search have also seen recent generative AI upgrades.

Meanwhile, Waymo, Alphabet’s autonomous vehicle division, set new records in 2025, surpassing 450,000 weekly rides and 14 million annual trips, highlighting the growth of its self-driving operations.

Analyst Sentiment and Price Targets

Wall Street remains overwhelmingly positive on Alphabet’s outlook. Most analysts rate the stock as a “Strong Buy,” though shares are already trading near the consensus price target of $332, suggesting limited short-term upside.

Recent notable analyst calls include Morgan Stanley and Goldman Sachs, both assigning a $330 price target in late October 2025. In December, Citigroup’s Ronald Josey and Wedbush each set a $350 target. J.P. Morgan’s Doug Anmuth is even more bullish, projecting a $385 target, anticipating further gains driven by Google’s AI and cloud expansion.

Overall, analysts are optimistic that Alphabet’s leadership in AI and continued innovation will support its elevated valuation, even as they acknowledge the stock is not inexpensive.