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On Friday, Cantor Fitzgerald analyst Deepak Mathivanan increased the price target for Alphabet Inc. (NASDAQ:GOOGL) shares to $171 from $159, while maintaining a Neutral rating on the stock. The adjustment follows Alphabet’s first-quarter earnings report, which revealed revenues and EBIT figures surpassing estimates by 1% and 7%, respectively, according to data from Visible Alpha.
Alphabet’s Search and YouTube segments both exhibited a growth of over 10% year-over-year, approximately 12% when excluding foreign exchange impacts. This growth occurred despite concerns over a slowing macroeconomic environment. However, Alphabet’s Cloud segment showed a slight deceleration in its growth rate. The company’s EBIT margins saw an expansion of around 200 basis points year-over-year, attributed to a moderation in compensation growth. InvestingPro data shows overall revenue growth of 13.87% in the last twelve months, with a robust gross profit margin of 58.2%.
The company did not provide specific guidance for the second quarter of 2025, but Mathivanan noted that the company’s commentary on recent trends was "less intimidating." Product-wise, Alphabet is experiencing robust adoption of artificial intelligence across its core offerings, including search, advertising, and cloud services.
Mathivanan’s analysis suggests that the first-quarter results could be seen as a positive indicator. Despite this, he believes that Alphabet’s stock is unlikely to experience a significant breakout as long as the macroeconomic uncertainty continues to loom. Following the earnings report, forecasts for Alphabet’s full-year 2026 revenue and earnings per share have been revised upwards by 4% and 7%, respectively.
The new price target of $171 is based on a 16 times multiple of the firm’s projected fiscal year 2026 earnings per share, which is an increase from the previous price target of $159. According to InvestingPro, Alphabet maintains a PEG ratio of 0.5, suggesting attractive valuation relative to growth. For deeper insights into Alphabet’s valuation and 12 additional ProTips, including detailed financial health analysis, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Alphabet Inc. reported a 10% year-over-year revenue growth in its Search business for the first quarter, surpassing investor expectations of 8% and the consensus estimate of 9%. This performance has led UBS to increase its price target for Alphabet shares to $186, while maintaining a Neutral rating. Bernstein also raised its price target to $185, reflecting cautious optimism about Alphabet’s ability to manage economic pressures. Meanwhile, Pivotal Research Group reiterated its Buy rating with a $225 price target, citing Alphabet’s strong market position and potential in AI and cloud computing. Stifel raised its price target to $200, maintaining a Buy rating following Alphabet’s better-than-expected advertising revenue and robust margins. Oppenheimer also increased its price target to $200, highlighting the positive impact of AI on Alphabet’s operations and the company’s strong first-quarter results. These developments indicate a general confidence among analysts in Alphabet’s strategic direction and financial health amidst ongoing economic challenges.
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