'Waves of AI enthusiasm': Loop Capital advises buying Alphabet shares despite risks

Loop Capital upgraded its rating on shares of Google's holding company, Alphabet, and now advises buying them. The upgrade follows Warren Buffett's Berkshire Hathaway's reported purchase of a stake in Alphabet and comes amid a steady decline in technology stocks due to investor concerns about the overvaluation of AI companies.

Analyst Rob Sanderson changed his rating on Alphabet shares from "Hold" (Hold) to "Buy" (Buy), Bloomberg reported. In addition, Loop Capital also increased the target price of Alphabet shares from $260 to $320, which implies their growth of about 12% relative to the closing price on Monday, November 17.

Sanderson noted that despite concerns about growing competition from artificial intelligence, Google's search results "remain as strong as ever," Bloomberg wrote. The wall of worry has been "swept away by a wave of enthusiasm around AI," Sanderson noted.

"The position of [cloud service] Google Cloud and the scale of its proprietary processors for artificial intelligence (TPU) capabilities is becoming increasingly clear," Sanderson added.

The upgrade from Loop follows news that Warren Buffett's Berkshire Hathaway acquired a stake in Alphabet in the third quarter. The position shows confidence on the part of the legendary investor, who typically invests less heavily in tech stocks, Bloomberg notes. That said, Berkshire sold more shares in the third quarter than it bought, and it cut its stake in Apple, for example.

Last month, Alphabet's results showed a surge in demand for its cloud and AI services. The report was taken by analysts as confirmation of the justification of its aggressive investments in artificial intelligence, Bloomberg writes. Following its release, Wall Street mostly raised its stock price targets on the company's shares.

According to Angelo Zino of analyst and research firm CFRA, Berkshire's stake "validates Alphabet's strong fundamentals" and "likely contributes to investor confidence." Zino expects Berkshire "would feel more comfortable investing in Alphabet than in other technology companies given the high free cash flow potential of its core business and attractive valuation."

Following the upgrade from Loop, nearly 90% of analysts tracked by Bloomberg recommend buying Alphabet stock. Not a single one gives a "sell" recommendation.

Shares of Alphabet were down 2.3 at the moment in trading on November 18, but then slowed down to about 0.1%%. Overall, the Nasdaq Composite, in which technology companies have a large weight, was losing more than 1.4%. Quotes are affected by the decline in the technology sector, caused by investors' concerns about the value of companies related to artificial intelligence, writes CNBC. Alphabet CEO Sundar Pichai told the BBC that the AI boom carries the risk of "irrational euphoria" and that "no company will be immune" if the bubble bursts.

Since the beginning of the year, Alphabet shares are up about 50% - more than double the growth of the Nasdaq 100 index. Alphabet is the best representative of the "Magnificent Seven" tech giants: its rally added more than $1.1 trillion to its market capitalization in 2025, Bloomberg notes.

This article was AI-translated and verified by a human editor