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Investing.com - Evercore ISI has raised its price target on Alphabet (NASDAQ:GOOGL) stock to $240.00 from $205.00 while maintaining an Outperform rating following the company's second-quarter earnings report. The tech giant, currently valued at $2.32 trillion, has seen 16 analysts revise their earnings expectations upward for the upcoming period, according to InvestingPro data.
The research firm cited "very strong Q2 EPS results" as the basis for its 17% price target increase, noting that revenue and operating income exceeded expectations despite rising market anticipation ahead of the earnings release. The company's robust financial health is reflected in its "GREAT" overall score on InvestingPro, with revenue growing at 13.07% and maintaining a P/E ratio of 21.15.
Alphabet demonstrated positive fundamental trends with organic revenue growth acceleration and operating margin expansion, according to Evercore ISI. The firm highlighted that both Search and YouTube growth accelerated on a reported basis, while the key Paid Click metric improved from 2% growth in Q1 to 4% in Q2.
Operating margin remained at a 12-year high of 34%, excluding a one-time legal charge, which Evercore ISI attributed to scale and compensation discipline despite accelerating depreciation growth. Google Cloud was noted as a particular standout, with 32% year-over-year growth and backlog increasing 38% compared to the previous year.
In response to cloud strength, Alphabet has increased its fiscal year 2025 capital expenditure guidance from $75 billion to $85 billion, which Evercore ISI characterized as evidence that "this AI investment AND product cycle is for real." For deeper insights into Alphabet's financial health and growth prospects, including 12 additional exclusive ProTips, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Alphabet reported a strong second-quarter performance, surpassing expectations across all revenue segments, according to RBC Capital. This led RBC to raise its price target for Alphabet to $220, maintaining an Outperform rating. KeyBanc Capital Markets also reiterated its Overweight rating on Alphabet, highlighting potential AI-driven growth, although the stock's price-to-earnings multiple remains at a discount compared to the S&P 500 index. Additionally, Google has unveiled a new AI model called Aeneas, designed to assist historians in analyzing ancient Latin inscriptions. In a separate development, Alphabet faces regulatory scrutiny in the UK, as the Competition and Markets Authority considers designating Google with 'strategic market status' for its mobile platforms. Meanwhile, Meta Platforms (NASDAQ:META) has recruited three AI researchers from Google DeepMind, who previously worked on a successful version of Google's Gemini model. These developments indicate a continued focus on AI advancements and regulatory challenges for Alphabet.
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