U.S. stocks steady; Cook’s dismissal, Nvidia earnings in spotlight
Friday - JMP analysts have maintained a Market Perform rating for Alphabet Inc. (NASDAQ:GOOGL), the parent company of Waymo, the autonomous vehicle (AV) technology company. With a market capitalization of nearly $2 trillion and an impressive "GREAT" financial health score according to InvestingPro, Alphabet continues to demonstrate strong fundamentals while maintaining more cash than debt on its balance sheet. Analysts at JMP highlighted Waymo’s potential to build its own AV network given the current landscape with less competition. They noted the advantages of owning the consumer relationship, which allows for better monetization opportunities without the need to share revenue, as well as the capability to offer additional products and services.
Waymo’s strategy involves leveraging Uber (NYSE:UBER) as a test platform, as evidenced by the company’s operation in Miami, which is Waymo’s latest market launch and operates under the Waymo One service. Analysts expect that future markets will also be serviced by Waymo One, with the company planning to expand into over ten markets by the end of 2025.
The analysts pointed out that Waymo’s success in monetizing its services, similar to Uber’s approach with advertising in Mobility and the development of Uber Eats, could be a significant factor in its growth. This aligns with Alphabet’s broader success in revenue generation, having achieved nearly 14% year-over-year growth and maintaining a healthy 58% gross profit margin. They believe that Waymo’s utilization of Uber in Miami is an experimental move, with the intention of Waymo One eventually taking over in future expansions.
However, the analysts also cautioned that their view could change if new entrants into the AV space create a fragmented consumer demand, which could lower the effective utilization of Waymo’s fleet. The potential for increased competition in the AV market remains a factor that could impact Waymo’s strategy and market position.
The maintenance of the Market Perform rating by JMP reflects a cautious but watchful stance on Alphabet’s stock as it relates to Waymo’s operations and expansion plans. The analysts’ comments underscore the importance of Waymo’s strategic decisions in the evolving autonomous vehicle industry and its potential impact on Alphabet’s revenue and growth. According to InvestingPro analysis, Alphabet currently appears undervalued, with analysts setting price targets up to $240 per share. For deeper insights into Alphabet’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Google has reported several significant developments. The company is nearing the completion of a $115 million acquisition of AdHawk Microsystems, a Canadian firm known for its eye-tracking technology. This acquisition is expected to bolster Google’s efforts in the headset and smart glasses markets. Additionally, Google has announced major upgrades to its Gemini app, introducing new features such as file upload and expanded capabilities for its Deep Research tool, now available in over 45 languages.
Google DeepMind has also unveiled Gemini Robotics and Gemini Robotics-ER, new AI models aimed at advancing robotics capabilities, with collaborations underway with companies like Apptronik. In terms of energy initiatives, Google, alongside other major firms like Amazon (NASDAQ:AMZN), has pledged to triple global nuclear energy capacity by 2050. Furthermore, Google has outlined suggestions for U.S. policy reforms to maintain its leadership in AI, emphasizing increased investment and international pro-innovation approaches. These recent developments highlight Google’s ongoing efforts in AI, technology, and sustainable energy.
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