Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, Citi analysts adjusted their outlook on Alphabet Inc. (NASDAQ:GOOGL), reducing the price target to $195 from the previous $229 while retaining a Buy rating on the shares. With the stock currently trading at $158.71 and analysts maintaining a strong buy consensus with targets ranging from $166 to $240, the decision follows insights gained from the recent Google Cloud Next (LON:NXT) conference, where Alphabet's advancements in artificial intelligence (AI) and infrastructure were showcased.
Maria Ripps of Citi highlighted the developments in Google Cloud Platform (GCP), particularly the progress in AI tools, with the introduction of the Gemini 2.5 family of models, and the launch of over ten new Agent offerings. Infrastructure improvements, such as the TPU v7, were also noted as positive strides. According to InvestingPro data, Alphabet maintains excellent financial health with strong profitability metrics, including a 58.2% gross profit margin and robust cash flows that easily cover its obligations. Despite the current economic challenges, conversations with conference attendees revealed a more optimistic view on AI and the potential cost savings from agents.
Despite the positive outlook on Alphabet's technology and product offerings, Citi analysts have tempered their price target due to the less predictable environment in the broader online advertising market, which has been affected by tariffs. The firm's valuation of Alphabet stock at approximately 16 times their estimated 2026 GAAP earnings per share (EPS) underpins the continued Buy rating. InvestingPro analysis indicates the stock is currently undervalued, with a PEG ratio of 0.5 suggesting attractive pricing relative to growth potential. For deeper insights into Alphabet's valuation and 12+ additional ProTips, consider exploring the comprehensive Pro Research Report.
Citi remains confident in Alphabet's ability to drive consistent revenue growth through its product ecosystem and the enhancement of search experiences with AI Mode. With a strong revenue growth of 13.87% in the last twelve months and projected 11% growth for FY2025, the company continues to demonstrate solid momentum. The firm anticipates further insights into Alphabet's AI products at the upcoming Google I/O event scheduled for May 20, 2025, with the next earnings report due on April 29, 2025.
In other recent news, Alphabet Inc. has been the focus of multiple analyst reports and industry developments. KeyBanc Capital Markets adjusted its price target for Alphabet to $185 from $202, maintaining an Overweight rating. This adjustment reflects anticipated challenges in the advertising sector and a potential slowdown in enterprise IT spending, especially concerning Google Cloud. Meanwhile, BofA Securities has maintained a Buy rating and a $185 price target, citing stable web traffic and potential growth in AI features as positive indicators for Alphabet's future.
JMP analysts kept a Market Perform rating on Alphabet, expressing concerns over potential disruptions to Google's U.S. search distribution due to an ongoing antitrust case. This case could impact Google's presence on Apple (NASDAQ:AAPL) devices, potentially affecting Alphabet's revenue streams. Despite these challenges, Alphabet's YouTube and Cloud services remain valuable, though analysts anticipate possible negative effects on financial projections for 2026 and beyond.
In a related development, Verizon (NYSE:VZ) has reported a significant sales increase following the deployment of an AI assistant developed using Google models. This AI implementation has enhanced customer service efficiency and sales, showcasing the potential of Google's AI capabilities in enterprise settings. These recent developments highlight the complex landscape Alphabet is navigating, with both challenges and opportunities shaping its future trajectory.
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