Alphabet's (GOOG, GOOGL) fundamentals remain solid even as rising capital spending pressures the stock, with accelerating paid clicks and stable cost-per-click trends pointing to stronger monetization, Wedbush Securities said in a Thursday note.

Wedbush pointed to Alphabet's 10-K, noting paid clicks rose 6% in 2025, with momentum building to roughly 11% in Q4 from a trough of 2% in Q1.

According to the report, cost-per-click increased 7% for the year, signaling Google is growing monetizable ad inventory while keeping pricing trends stable.

The firm noted AI is lifting Search and Cloud performance, with Gemini enhancing ad relevance on complex queries and driving incremental monetization, alongside strong Cloud demand as backlog rose 55% sequentially in Q4 and more than doubled year over year.

Wedbush acknowledged near-term margin headwinds from higher spending but said the investment fuels long-term expansion in AI and cloud, cementing Alphabet's position as a leading AI beneficiary, the report added.

The firm maintained its outperform rating on the stock with a price target of $370.

Shares of the company were down 4.5% in recent trading.

Price: 318.37, Change: -14.97, Percent Change: -4.49