S&P 500 rises as health care, tech gain to overshadow Fed independence concerns
On Thursday, Bernstein analysts at SocGen Group adjusted their outlook on Alphabet Inc. (NASDAQ:GOOGL) by increasing the price target from $185.00 to $210.00, while maintaining a Market Perform rating on the shares. The revision comes amidst expectations for steady growth in Google Search and potential upside from other segments. According to InvestingPro data, Alphabet’s stock is trading near its 52-week high of $202.29, with analyst targets ranging from $151 to $240. The company’s current market capitalization stands at $2.4 trillion, reflecting its position as a prominent player in the Interactive Media & Services industry.
The analysts project that Google Search will continue to grow at approximately 11% year-over-year, although there could be some negative impact from foreign exchange rates. Meanwhile, YouTube is anticipated to sustain its growth momentum, bolstered by robust political advertising spend and the benefits from connected TV (CTV) through cross-selling opportunities with Sunday ticket offerings.
Beyond advertising, Alphabet’s Cloud services are highlighted as a key factor for the company’s appeal as a potential "AI winner." However, any slowdown in gaining additional cloud market share could weaken the bullish perspective. The analysts anticipate that the price increase for Google Workspace will become more evident in 2025. InvestingPro analysis shows the company maintains strong financial health with a "GREAT" overall score, supported by robust profitability metrics including a 58.13% gross profit margin and 32% return on equity. Subscribers can access 10+ additional ProTips and comprehensive financial metrics through InvestingPro’s detailed research reports.
Alphabet is also expected to see margin improvements this quarter, as costs associated with Pixel shifted to the third quarter, and the reversal of a $1.7 billion European Commission (EC) fine is expected.
Meta Platforms Inc (NASDAQ:META).’s management insights on a robust digital advertising environment and significant contributions from online commerce to fourth-quarter growth are seen as positive indicators for Google. Meta has forecasted revenue growth of 11-18% year-over-year, excluding a 3% foreign exchange headwind, which could bode well for Alphabet’s performance.
Despite the near-term optimism, Bernstein analysts caution that regulatory and competitive challenges may continue to constrain Alphabet’s stock in the longer term. They suggest that significant gains in cloud market share or a substantial cost reduction program would be necessary for the stock to advance beyond its current range. With a P/E ratio of 26 and revenue growth of 14.38% over the last twelve months, investors seeking deeper insights can access Alphabet’s complete financial analysis through InvestingPro’s comprehensive research reports, available for 1,400+ top US stocks.
In other recent news, Alphabet Inc. continues to make headlines with significant developments across various sectors. Oppenheimer and KeyBanc Capital Markets have both maintained positive ratings on Alphabet, increasing the price target to $225. These adjustments reflect Alphabet’s robust revenue growth and optimistic investor discussions regarding the company’s upcoming financial results and search revenue.
Alphabet’s AI subsidiary, Waymo, announced plans to expand its testing operations to 10 new cities by 2025, a move that could potentially lead to the launch of a commercial robotaxi service. This expansion could pose a significant challenge to ride-hailing giants Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT).
Meanwhile, Alphabet’s Google launched Meridian, an open-source marketing mix model designed to assist marketers and data scientists in making intelligent, data-driven decisions. The model provides a modern approach to measuring outcomes across different channels.
However, Alphabet also faces potential challenges. DeepSeek, a Chinese AI company, has emerged with an innovative approach that could disrupt the current AI industry paradigm. Additionally, the company’s Google Search segment faces challenges due to the ongoing Department of Justice trial and increasing competition. Despite these potential hurdles, analysts maintain a positive outlook on Alphabet’s growth potential.
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