JPMorgan Identifies Significant Upside for Alphabet Shares, Highlights Hidden Asset Value

Alphabet Inc.'s stock showed notable strength in pre-market trading on Friday, climbing back above the $303 threshold. This movement follows a bullish recommendation from analysts at JPMorgan, who have named the tech giant a top investment pick for 2026. The bank's assessment also brings a substantial, underappreciated asset on Alphabet's balance sheet into sharper focus.

The recent share price recovery comes after a week of notable swings. Earlier pressures, partly linked to negative sentiment following a failed Oracle-OpenAI financing deal, had pushed the stock below the psychologically significant $300 level. However, Thursday's U.S. inflation data provided a more favorable backdrop for interest-rate-sensitive technology equities, setting the stage for a rebound. By Friday's early session, shares were trading near $306, largely recouping mid-week declines. Market participants view the recovery of the $300 mark as a technically positive signal.

Ambitious Price Target and AI Confidence

JPMorgan has placed Alphabet on its list of the most promising equities for the coming year, assigning a price target of $385. From Thursday's closing price of $303.75, this implies an approximate upside potential of 27%. The bank's research team bases this optimistic outlook on the company's formidable positioning within the artificial intelligence competitive landscape. Despite intermittent market concerns about rising competition, JPMorgan anticipates robust growth driven by the integration of AI across Google's extensive product portfolio. The timing of the endorsement was pivotal, as it followed a five-session losing streak for the stock.

The SpaceX Stake: A Potential Windfall

Beyond core operations, analysts are drawing attention to Alphabet's strategic investment in SpaceX. The parent company of Google holds an estimated 7% stake in Elon Musk's aerospace enterprise. Speculation around a potential SpaceX initial public offering (IPO) by the end of 2026, with a possible valuation of $1.5 trillion, suggests this holding alone could be worth over $100 billion. This represents a considerable asset that currently receives little weight in Alphabet's overall market valuation.

Should investors sell immediately? Or is it worth buying Alphabet?

Infrastructure Expansion and Regulatory Landscape

On the operational front, Alphabet continues to aggressively build out its computational capacity. The company is developing a new data center in Nanto, Japan, with a planned capacity of 400 megawatts. The facility's first phase is slated to become operational by the end of 2028, underscoring the long-term infrastructure demands of the AI sector.

Concurrently, the company is navigating regulatory challenges. On Friday, Mexico's antitrust authority prohibited Google from requiring device manufacturers to pre-install Android services. Despite this development, the market reaction remained positive, indicating that investor confidence in the long-term growth narrative remains predominant.

Looking ahead, with JPMorgan's revised target providing fresh momentum and the anticipated monetization of the Gemini AI platform through advertising placements starting in 2026, investor sentiment appears to be turning bullish once more.