Citi raises Alphabet stock price target to $200, maintains Buy rating

Published 25/04/2025, 09:48
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On Friday, Citi analyst Ronald Josey increased the price target for Alphabet (NASDAQ:GOOGL) stock to $200 from the previous $195, while reiterating a Buy rating on the company’s shares. The adjustment follows Alphabet’s recent financial performance, which showcased a 10% year-over-year growth in Search revenue. According to InvestingPro data, Alphabet’s overall revenue growth stands at 13.87%, with the company maintaining a robust market capitalization of $1.95 trillion. Current analysis suggests the stock is trading slightly below its Fair Value, presenting a potential opportunity for investors.

Josey highlighted the resilience of Search ads and the shift in YouTube’s strategy towards Direct Response (DR) advertising as key factors supporting the company’s revenue generation. He also pointed to Alphabet’s expanding profit margins as a reason for the firm’s increasingly positive stance on the stock. InvestingPro data reveals impressive profitability metrics, with a gross profit margin of 58.2% and strong cash flows that easily cover interest payments. These are just two of the twelve exclusive ProTips available for Alphabet on InvestingPro.

Despite the optimistic outlook, the analyst noted several challenges facing Alphabet, including competition in search, regulatory issues, and the broader macroeconomic environment. Additionally, Josey mentioned management’s commentary on a ’slight’ impact to second-quarter revenue due to changes in the de-minimis exemption, which he believes underscores the strength of Google’s advertising auction system.

Furthermore, Josey discussed the growing importance of AI Overviews and AI Mode in Search, suggesting that these features are contributing to increased usage and monetization, a trend he expects to continue. The analyst’s observations also included positive implications for other companies, citing that Alphabet’s Search and Cloud results bode well for Meta Platforms (NASDAQ:META) and Amazon (NASDAQ:AMZN). Moreover, he mentioned that positive commentary on the Waymo Austin rollout is favorable for Uber Technologies (NYSE:UBER).

In conclusion, Citi’s updated price target reflects confidence in Alphabet’s current strategies and future prospects, particularly in the areas of AI and autonomous driving technology. The firm maintains a bullish stance on Alphabet stock, with the raised target price indicating a belief in the company’s continued growth potential. With an impressive Financial Health Score of "GREAT" on InvestingPro, and a P/E ratio of 19.74, Alphabet demonstrates strong fundamentals. Discover comprehensive analysis and over 30 key financial metrics in the exclusive Pro Research Report, available now on InvestingPro.

In other recent news, Alphabet Inc. reported first-quarter earnings that exceeded expectations, with revenues and EBIT figures surpassing estimates by 1% and 7%, respectively. The company’s Search and YouTube segments grew by over 10% year-over-year, although its Cloud segment showed a slight deceleration. Following these results, several analysts revised their price targets for Alphabet. Cantor Fitzgerald increased its target to $171, noting an expansion in EBIT margins, while UBS raised its target to $186, acknowledging Alphabet’s resilience amid challenging conditions. Bernstein set a new target of $185, reflecting a cautious view of Alphabet’s ability to navigate economic pressures. Pivotal Research Group maintained a $225 target, emphasizing Alphabet’s strong position in AI and search. Stifel increased its price target to $200, highlighting Alphabet’s robust margins and commitment to maintaining operating efficiency. These developments underscore Alphabet’s strategic focus on AI and its continued investment in growth areas like Cloud and advertising.

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