Mizuho initiates Alphabet stock coverage with Outperform rating

Investing.com - Mizuho initiated coverage on Alphabet (NASDAQ:GOOGL), a $2.95 trillion market cap tech giant, with an Outperform rating and a $295 price target, representing approximately 20% upside potential from current levels. According to InvestingPro data, the stock is trading near its 52-week high with impressive year-to-date returns of 30%.

The investment firm cited Alphabet’s strong positioning to benefit from artificial intelligence across key areas including advertising and cloud services. Mizuho highlighted the company’s potential to capitalize on new generative AI native app advertising and AI-driven expansion into sales and marketing expenses. The company’s solid fundamentals support this outlook, with InvestingPro analysis showing robust revenue growth of 13% and a healthy P/E ratio of 26x.

Mizuho’s analysis suggests that Alphabet’s AI Mode and Gemini are helping to stem market share losses, with recent Similar Web browser data showing moderating share losses against ChatGPT following the AI Mode rollout in terms of time per user per day.

The firm established a bull case with 62% potential upside and a bear case with 39% potential downside in its coverage initiation. Mizuho’s price target of $295 represents a premium to Alphabet’s current trading price.

Mizuho also noted that AI improvements are enhancing content quality and recommendations on YouTube, driving increased user engagement, and believes the positive AI impact on Google’s advertising business "has significant room to run."

In other recent news, Google is set to propose changes to its advertising technology business by early November in response to a €3 billion ($3.5 billion) fine from the European Union. The proposal will not include a complete breakup of its Ad Manager, despite EU regulators and industry competitors advocating for such action. Additionally, Google has launched a major upgrade to its Chrome browser by integrating AI features, known as Gemini, to enhance user experience. This upgrade is currently available to desktop users in the United States, with plans for wider rollout soon.

Google’s influence extends to Africa, where it has surpassed its 2021 pledge of $1 billion for internet connectivity, planning to establish four subsea cable connectivity hubs across the continent. This development is expected to bolster digital infrastructure and connectivity in the region. In partnership news, PayPal announced a multiyear strategic collaboration with Google to transform commerce across platforms and devices. This partnership will integrate PayPal’s payment solutions into Google’s ecosystem, leveraging AI to enhance services.

Meanwhile, Lyft has maintained its Equalweight rating from Morgan Stanley after announcing a partnership with Waymo for autonomous rideshare services. The partnership will see autonomous services launched in Nashville starting in 2026, initially on Waymo’s app before integration into Lyft’s network.

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