KeyBanc raises Alphabet stock target to $195, keeps Overweight

On Friday, KeyBanc Capital Markets adjusted its outlook on Alphabet Inc. (NASDAQ:GOOGL) shares, increasing the price target from $185.00 to $195.00. The firm maintained its Overweight rating on the stock. The new price target reflects a positive perspective on Alphabet’s recent performance and future prospects. According to InvestingPro data, Alphabet, now valued at $1.95 trillion, maintains a "GREAT" financial health score, with strong profitability and cash flow metrics.

In the first quarter, Alphabet reported earnings that surpassed expectations, with revenue reaching $350.02 billion and showing robust growth of 13.87% year-over-year. KeyBanc’s analyst highlighted that the company’s growth was primarily driven by cyclical areas such as Search and YouTube, as well as its Subscriptions business, which has not been the main focus for investors. Despite potential concerns about the sustainability of growth, the analyst pointed out the company’s distribution advantages in artificial intelligence (AI).

The analyst believes that Alphabet’s AI distribution capabilities are becoming increasingly evident. This advantage, along with anticipated cost efficiencies and share repurchase initiatives, is expected to contribute to earnings per share (EPS) of over $10 by the year 2026. The positive outlook is based on the premise that Alphabet’s earnings predictability, despite a volatile macroeconomic environment, should provide some support to the company’s valuation.

KeyBanc’s analysis suggests that Alphabet’s stock is deserving of a valuation multiple of 19 times its projected 2026 earnings per share, aligning with its current P/E ratio of 19.74. This valuation appears attractive given the company’s PEG ratio of 0.5, suggesting it’s trading at a low P/E relative to its near-term earnings growth. This valuation metric underpins the revised price target of $195. The Overweight rating indicates that KeyBanc views Alphabet’s shares as a favorable investment, with performance expected to outpace the average market return in the next 12 to 18 months.

Investors and market watchers are keeping an eye on Alphabet’s trajectory, as the tech giant continues to navigate the challenges and opportunities presented by the global economic landscape. KeyBanc’s updated price target and rating reaffirm a confidence in Alphabet’s ability to leverage its strengths and deliver value to shareholders. For deeper insights into Alphabet’s valuation and growth prospects, InvestingPro offers an extensive analysis through its Pro Research Report, featuring comprehensive financial metrics and expert analysis among 1,400+ top US stocks.

In other recent news, Alphabet’s first-quarter earnings of 2025 exceeded expectations, according to DA Davidson, which maintained a Neutral rating with a $160 price target. Despite the positive earnings, the company faces a slowdown in growth within its advertising and Google Cloud segments. Alphabet announced a 5% increase in its annual dividend and a $70 billion share repurchase program, signaling confidence in its financial health. Guggenheim reiterated a Buy rating with a $190 price target, highlighting Alphabet’s strong cash flow and potential in AI, cloud computing, and other ventures. The firm noted that Alphabet’s valuation is at a discount compared to broader market indices, attributing this to growth concerns and regulatory challenges.

Meanwhile, RBC Capital Markets maintained an Outperform rating with a $200 price target, expressing optimism about Alphabet’s operational expenditure efficiencies and AI’s impact on growth. The analysts also adjusted their estimates slightly downward for Network & Other revenue, remaining more conservative than Street estimates. Additionally, Alphabet’s stock was among those affected by U.S.-China tariff uncertainties, which led to a decline in the Magnificent Seven stocks. Lastly, Google, a part of Alphabet, mandated a hybrid work schedule for remote employees, requiring them to work from the office at least three days a week to avoid potential job risks.

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