Xiaomo: This year, the importance of Google Cloud services activities will surpass previous years, reiterating Alphabet's "buy" rating.

JPMorgan Chase released a report stating that Google Cloud Next 2026, to be held from the 22nd to the 24th, will have a greater impact compared to previous years. This is due to the increasing importance of Google Cloud as the company's second largest business line, and its fastest growing business. Revenue is expected to increase from a 48% annual growth rate in the fourth quarter of last year to an estimated 61% in the first quarter of this year. Backlog orders in the fourth quarter of last year increased by approximately 160%, reaching $240 billion. In terms of profit margin, Google Cloud's operating margin expanded by 960 basis points to 23.7% last year, and is projected to further expand to 27.9% this year. The bank expects this year's event to highlight the growth momentum that Google Cloud has built up over the past three years. The key question before the event is whether AI infrastructure and model investments can be translated into sustainable enterprise adoption, repeatable return on investment, and economically resilient unit economics. The event is believed to help highlight the importance of Google's significant capital expenditure. The bank reiterated its "overweight" rating on Alphabet with a target price of $395.