In short
- Bank of America reiterates “buy” on Letters with a target of $430—10.9% up from $387.66.
- The researchers cite AI Overviews at 2.5 billion users, AI Mode at 1 billion, and Gemini doubling from 400 million to 900 million monthly users annually.
- The report has more: the stock fell 2% on the day of I/O, free cash flow is expected to drop ~$29 billion in 2026 due to increased power, and BofA openly questions whether AI applications will “outpace” traditional search.
Google had good I/O. Then its stock fell 2%. Bank of America still says buy.
BofA analysts Justin Post and Nitin Bansal published their note on May 20 with a firm “buy” and a $430 price objective on Alphabet – 10.9% upside from its current price of $387.66. Their verdict: “Google has stopped playing, search & advertising technology has shown the development of new products.”
The bull case revolves around three user metrics from the Google I/O press release. AI Reviews – short for AI at the top of search results – now has 2.5 billion users. AI Mode, the interactive part of Search, has 1 billion and is doubling every quarter. Gemini’s monthly users have grown from 400 million a year ago to 900 million today.
BofA’s reading is that “the ramp shows that Google is successfully transitioning Search users to AI-based experiences, reducing the risk of competitive disruption.”
The bank is honest about the unresolved issues, though: whether the monetization of AI questions “can go beyond research” is an open question. More difficult questions mean more advertising space in mind. The details are still not confirmed.
Five bets on the table
BofA built its I/O analysis around five supply chains.
For example: Gemini Who combines Gemini with video and audio production tools – what the bank calls the company “a push towards global AI systems that can understand and interact in different environments.” Gemini 3.5 Flash brings “higher performance and lower cost compared to competing edge models,” the cost edge needed for the Cloud to be more successful as consumer applications.
Search: Gemini AI is now integrated directly into Search along with “Search Agents” – assistants who continuously manage finances, shopping, travel, and games on behalf of users. The redesigned Gemini software adds dynamic layouts, fluid animations, and AI-generated visuals.
On sponsors: Gemini Spark is a 24/7 cloud user that manages Gmail, Docs, Sheets, Calendar, Chrome, and other third-party services without using anything. It is Google’s response to the development of open source tools such as Hermes and OpenClaw.
BofA argues that Google’s “captured and driven audience” creates the beginning of a “closing of the environment and systems around the operation.”
About shopping: Universal Cart allows users to store, manage, and shop at retailers including Target and Walmart. Amazon is not in the cart. Hotel reservations are “probably months away,” according to BofA, with negotiations still ongoing.
On the hardware side: two sets of glasses made by Gemini-the first audio models are expected this fall, and the preview glasses that were shown last year. The first audio line “could be direct competition with Meta’s Ray-Ban.” Camera specifications and battery life have not been announced, which BofA reads as Google still has “work to do before release.”
Yes, but…
It’s not all roses for Google, however. Free cash flows are expected to decrease from $73.3 billion in 2025 to $44.1 billion in 2026 while capital expenditures increase from $91.4 billion to $186.6 billion.
Earnings per share tell a similar story: BofA models $14.43 per share in 2026, gradually moving to $14.49 in 2027 before returning to $17.62 in 2028. Current earnings. The result is the story of 2028.
Statistically, Alphabet is still very expensive. BofA says the investment is “appropriate and likely to continue due to our strong reliance on Alphabet’s current position.”
The report also mentions four common threats: increasing search traffic for AI competitors, integration of LLM in Search taking longer than expected, EU Digital Markets Act forcing compliance, and rising capex forcing free movement.
BofA says Google’s stock could reach $430 because it values the company at 28 times expected earnings in 2027, including Google’s earnings. Alphabet’s earnings for Q3 and Q4 will be a real test of whether the 1 billion users of AI Mode translate into economic growth that will allow several to continue.
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