Scotiabank cuts Alphabet stock price target on AI costs, weaker search
Scotiabank reduced its price target for Alphabet (GOOG) to $375 from $450, citing weaker search monetization and higher AI costs. Alphabet's shares fell 10% in after-hours trading as Q3 free cash flow burn worsened to negative $9.1 billion. The company's Q3 revenue grew 12% YoY, but earnings missed expectations. Analysts have mixed outlooks, with some lowering price targets but maintaining positive ratings.
How this was made
The 30-second read
Why it matters
The combination of a fresh price‑target cut and an earnings miss creates immediate downside risk for Alphabet.
Market read
Alphabet's earnings and target revision affect both its stock and the broader tech sector, influencing investor sentiment on AI‑related investments.
What to watch
Strong cloud revenue growth and cash‑rich balance sheet could cushion short‑term weakness.
Background
Scotiabank lowered its price target on Alphabet while the company reported Q3 2026 earnings that missed expectations on earnings per share but beat revenue.
Ticker impact
Scotiabank cut Alphabet's price target to $375 and shares fell ~10% after-hours on weaker search monetization and higher AI costs.
likely further pressure as the market prices in lower guidance and AI cost concerns
The price‑target cut and earnings shortfall are fresh, material facts that directly affect valuation expectations.
Market effects
Search and AI‑related stocks may face broader scrutiny as AI cost pressures surface.
U.S. tech sector sees modest pullback amid mixed earnings signals.
Alphabet's size means its earnings and guidance influence global market sentiment on AI investments.
Counterpoint
If AI spend translates into long‑term cloud margin expansion, the price‑target cut may be overly pessimistic.
Key entities
- companyAlphabet Inc.
U.S. listed tech giant (NASDAQ: GOOG) subject of analyst downgrade and earnings release.
- financial_institutionScotiabank
Analyst firm that reduced Alphabet's price target.
