Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, JMP analysts, including Andrew Boone, maintained a Market Perform rating on Alphabet Inc. (NASDAQ:GOOGL) shares, currently trading at $158.71. According to InvestingPro analysis, the stock appears undervalued compared to its Fair Value, with strong financial metrics including a 13.87% revenue growth in the last twelve months. The analysts cited concerns over potential disruptions to Google's U.S. search distribution due to the ongoing antitrust case, which could impose penalties affecting Google's presence on Apple (NASDAQ:AAPL) devices.
The analysis by JMP points to the emergence of new search entrants that may challenge Google's query share and its ability to monetize search effectively. These market dynamics are expected to influence advertising formats and the number of ads displayed, which could impact Alphabet's revenue streams, though the company maintains robust profitability with a 58.2% gross margin and an impressive return on equity of 33%.
Despite acknowledging the inherent value in Alphabet's YouTube, Cloud services, and the current model of its search business, JMP analysts anticipate possible negative effects on their financial projections for the company in 2026 and beyond. The evolving landscape of search technology and competition is seen as a significant factor in this outlook.
The antitrust case against Google has been a point of focus for industry observers, as it could lead to major changes in how the tech giant operates its search engine, especially in terms of its distribution on third-party platforms like those of Apple.
Alphabet Inc. has not publicly responded to the rating reiteration or the concerns raised by JMP analysts regarding the antitrust case and the competition in the search engine market. The company's stock performance will continue to be observed by investors as these legal and market challenges unfold.
In other recent news, Alphabet Inc. has been the focus of several significant developments. KeyBanc Capital Markets adjusted its price target for Alphabet to $185 from $202, maintaining an Overweight rating due to anticipated challenges in advertising and potential slowdowns in Google Cloud's enterprise IT spending. The firm revised its revenue and earnings per share forecasts for 2025 and 2026, with expectations of a 1.7% and 2.9% decrease in revenues, respectively. Meanwhile, BofA Securities reaffirmed a Buy rating with a $185 target, noting stable web traffic for Google and highlighting the competitive landscape in AI. BofA remains optimistic about Google's AI advancements and potential monetization improvements.
In another development, Verizon (NYSE:VZ) reported a substantial increase in sales after implementing an AI assistant developed using Google models, enhancing customer service efficiency. Google also announced the availability of its Deep Research feature on the Gemini 2.5 Pro Experimental model, offering enhanced research capabilities. This feature has been well-received by users, demonstrating improved analytical reasoning and information synthesis. These recent developments underscore Alphabet's ongoing efforts in AI and cloud technologies, amidst a challenging advertising environment.
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