Wolfe raises estimates for hyperscalers, says growth is underpreciated

Investing.com -- Wolfe Research has sharply raised its revenue, capital expenditure, and earnings estimates for Alphabet and Amazon, arguing that growth at both companies' cloud units is significantly underappreciated by the Street.

Analyst Shweta Khajuria raised her 2026 and 2027 Google Cloud Platform revenue growth estimates to 81% and 48%, respectively, running 11% and 8% above consensus.

On the capital side, Wolfe lifted its 2027 Alphabet capital expenditure estimate to $300 billion, around 26% above the Street, and added 15 gigawatts of capacity in 2028. Anthropic is expected to account for 25% to 30% of GCP revenue in both 2027 and 2028, Wolfe said.

For Amazon Web Services, Wolfe raised 2026 and 2027 revenue growth estimates to 37% and 44%, coming in 6% and 19% above consensus, respectively. The firm's 2027 Amazon capital expenditure estimate was lifted to $280 billion, 27% above the Street, with Anthropic projected to account for roughly 30% of AWS revenue in 2027.

Wolfe maintained Outperform ratings on both stocks. The firm raised its price target on Alphabet to $460 from $430, implying roughly 27% upside, while trimming its target on Amazon slightly to $315 from $320, still implying approximately 29% upside.

Khajuria described Amazon as "one of best in class assets" in Wolfe's coverage universe, citing accelerating AWS growth, expanding margins, and the company's exposure to some of "the largest TAMs" across retail, cloud, advertising, and logistics.

Wolfe's GOOGL Outperform is anchored in the view that Alphabet's scale and AI investments should enable it to outgrow the digital advertising market and gain cloud share.

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