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Investing.com - HSBC raised its price target on Alphabet (NASDAQ:GOOGL) to $335.00 from $295.00 on Thursday, while maintaining a Buy rating on the stock.
The price target increase follows stronger-than-expected growth in Google Cloud’s revenue backlog, which now stands at $155 billion, representing a 43.3% increase from $108.2 billion at the end of the second quarter.
HSBC noted that the cloud backlog exceeded consensus expectations by 30.2%, as analysts had projected a figure of $119 billion, with the growth primarily driven by enterprise AI demand.
Alphabet has revised its capital expenditure guidance for fiscal year 2025 upward to $91-93 billion, compared to previous guidance of $85 billion, implying fourth-quarter capital expenditure of $28.4 billion versus $24.0 billion in the third quarter.
The company is expected to guide for "materially higher" capital expenditure for fiscal year 2026 when it reports fourth-quarter results, with HSBC now projecting $120 billion in spending for FY26, representing a 29.0% year-over-year increase.
In other recent news, Alphabet reported significant third-quarter results, with revenue surpassing $100 billion for the first time in its history. The company’s operating income margin reached 33.9%, excluding a substantial European Commission fine. Evercore ISI raised its price target for Alphabet to $325, citing the strong quarterly performance, while Canaccord Genuity increased its target to $330, maintaining a Buy rating. DA Davidson also raised its price target to $300, highlighting the continued growth of Google Cloud as a key factor. Baird adjusted its price target to $310, noting the positive impact of generative AI on Alphabet’s core businesses. Citizens reiterated its Market Outperform rating, emphasizing the strong utilization of Google’s AI infrastructure. These developments reflect a positive outlook from multiple analyst firms, underscoring the company’s robust financial performance and strategic advancements.
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