Alphabet Inc
The Alphabet Analysts:
- BMO Capital analyst Brian Pitz reiterated an Outperform rating on Alphabet and raised the price target from $215 to $217.
- KeyBanc Capital Markets analyst Justin Patterson maintained an Overweight rating and raised the price target from $200 to $215.
- Cantor Fitzgerald analyst Deepak Mathivanan reiterated a Neutral rating with a $190 price target.
- JMP Securities analyst Andrew Boone reiterated a Market Outperform rating and raised the price target from $200 to $220.
- Seaport Research analyst Aaron Kessler upgraded the stock from Neutral to Buy and established a $200 price target.
- Needham analyst Laura Martin maintained a Buy rating with a $210 price target.
- Goldman Sachs analyst Eric Sheridan maintained a Buy rating and raised the price target from $208 to $210.
- Truist analyst Youssef Squali maintained a Buy rating and raised the price target from $220 to $225.
- Morgan Stanley analyst Brian Nowak maintained an Overweight rating and raised the price target from $190 to $205.
- Oppenheimer analyst Jason Helfstein maintained an Outperform rating and raised the price target from $185 to $215.
- Roth MKM analyst Rohit Kulkarni maintained a Buy rating with a $212 price target.
- Piper Sandler analyst Thomas Champion reiterated an Overweight rating and raised the price target from $200 to $210.
The analyst also highlighted artificial intelligence use cases for Alphabet.
"Cloud revenue accelerated once again on AI workloads and differentiated security offerings," Pitz said.
Pitz said the company's search outlook improves thanks to AI initiatives like AI Overviews, Circle to Search and Lens.
"Google has 20+ years of AI initiatives that are now being rolled out to its enterprise and SMB clients."
KeyBanc on GOOGL: Alphabet reported solid search and cloud growth in the quarter, Patterson said in a new investor note.
"In our view, Alphabet remains a case of the narrative vs. numbers," Patterson said.
The analyst said there are concerns over the AI risk and regulation, but long-term revenue growth remains in place.
"Believe patient shareholders will be rewarded."
Cantor on GOOGL: Solid third-quarter figures might not be enough to shift narratives of bulls and bears, Mathivanan said.
"The focus now shifts to Nov. 20, when the DOJ [U.S. Department of Justice] is expected to reveal remedies they seek in the antitrust trial," Mathivanan said.
The analyst said Alphabet's "valuation is attractive" with shares trading at a price-to-earnings ratio of 20x based on fiscal 2025 estimates. The antitrust risks and AI-related risks keep the analyst on the sidelines.
JMP on GOOGL: Stable search demand and accelerated cloud revenue were highlights from third-quarter results for Boone.
"AI remained the key theme of the call as Google is rolling out AI Overviews to 100+ countries while Gemini is incorporated into all seven Google products with 2B+ monthly users," Boone said.
The analyst said there remains concerns about a growing number of "search access points," including other tech companies, chatbots and social media.
"With YouTube well positioned to capture the transition of linear TV dollars to CTV and cloud strength highlighted by this quarter's accelerating revenue, we continue to view Google as a net beneficiary of AI."
Seaport on GOOG: Continued advertising momentum and accelerating cloud growth were key highlights in the quarterly results for Kessler.
"We expect continued near-term strength driven in part by AI," Kessler said.
The analyst said the U.S. Department of Justice investigations are an overhang, but the appeals process will likely take some time, eliminating the item as a near-term headwind.
Needham on GOOGL: Vertical integration could be a theme for Alphabet as the company's generative AI initiatives hit several business lines, Martin said in a new investor note.
The analyst said Google Search will benefit from GenAI as will other business lines.
"We believe that GOOGL's primary upside valuation driver over the next 3-5 years will be its proprietary large language models," Martin said.
Martin has been bullish on a potential breakup of Alphabet with the sum-of-the-parts valuation higher than the share price. The analyst estimates that YouTube could be worth $532 billion or $43 per share as a standalone business.
"We believe that GOOGL is worth more in pieces than together, so we welcome regulators' attempts to break up GOOGL."
"GOOGL is our top large-cap stock pick for 2024, owing to a strong macro backdrop, falling interest rates, record political ad spending, data advantages, and Generative AI integrations."
Goldman Sachs on GOOGL: Strong operating momentum with long-term investments coming was a key theme for Sheridan in the company's third-quarter results.
The analyst increased estimates for CapEx spending due to increased spending for artificial intelligence initiatives. Sheridan said the key question could be how the capex translates into sustained revenue growth.
"We continue to view Alphabet as well-positioned against both the current and potential future computing landscapes," Sheridan said.
Truist on GOOGL: Alphabet continues to invest in high-priority areas such as artificial intelligence, technology infrastructure and YouTube, Squali said in a new investor note.
"We remain constructive on GOOGL following a broad-based beat across Search, Cloud and Devices with improving margins," Squali said.
The analyst said Alphabet remains "at the forefront of the AI race," which could expand the company's total addressable market size for search and cloud and boost shareholder value.
Morgan Stanley on GOOGL: Durable search business and better results from YouTube than expected were key quarterly highlights for Nowak.
The analyst said the company's commentary on increased adoption, engagement and monetization from AI initiatives should give the market more confidence in the long-term outlook for the stock.
"GOOGL also showcased how it is using GenAI to become more efficient and productive internally, and improving the cost to serve AI Overview queries," Nowak said.
Oppenheimer on GOOG: Alphabet saw upside across all segments with AI driving upside, Helfstein said in a new investor note.
The analyst said AI is helping to increase engagement and improving advertising intent for items like YouTube.
Roth MKM on GOOGL: Alphabet's third-quarter results could make the stock a buy on the strength for investors, Kulkarni said in a new investor note.
"We believe GOOGL has promise ahead with lasting benefits from this 'AI re-rating' as AI infrastructure broadens Search uses and monetization channels," Kulkarni said.
The analyst highlighted strength in YouTube in the quarter, which has been the most streamed platform on TVs in the U.S. for 20 consecutive months.
Piper Sandler on GOOGL: Alphabet's cloud segment and YouTube were the standouts in the third quarter for Champion.
"Cloud op margin climbed to 17%, up from 11% last quarter and driven by a 57% incremental margin," Champion said.
GOOGL/GOOG Price Action: GOOGL stock is up 4.05% to $176.53 on Wednesday versus a 52-week trading range of $122.69 to $191.75. Alphabet stock is up around 27% year-to-date in 2024. GOOG is up 4.14% at $178.22 versus a 52-week trading range of $123.93 to $193.30, and is up around 27% year-to-date in 2024.
