S&P 500 rises as health care, tech gain to overshadow Fed independence concerns
On Monday, Needham analysts raised their price target for Alphabet Inc (NASDAQ:GOOGL) shares, increasing it to $225 from the previous $210 while maintaining a Buy rating. The stock, currently trading near its 52-week high of $202.29, has demonstrated strong momentum with a 32% return over the past year. According to InvestingPro analysis, Alphabet maintains a "GREAT" financial health score, supporting the positive outlook. The adjustment follows a series of interviews with CEOs at the Consumer Electronics Show (CES) and at the Needham Growth Conference, which took place in January.
With Alphabet's next earnings report due on February 4, 2025, investors are closely watching the company's performance. The revised estimates for Alphabet's financial performance include a projection of $96.4 billion in total revenue for the fourth quarter of 2024, marking a 12% year-over-year increase and 1% above previous estimates. Net revenue is expected to reach $81.5 billion, up 13% year-over-year and also 1% higher than earlier projections. Operating income before depreciation and amortization (OIBDA) is anticipated to grow by 24% year-over-year to $40.6 billion, and operating income is projected to rise by 27% to $30.2 billion, both exceeding prior estimates by 2% and 3%, respectively. Earnings per share (EPS) for the same period are estimated at $2.11, up 29% year-over-year and 4% above previous expectations.
The primary driver behind the optimistic forecast is Alphabet's Cloud business, which has shown significant strength. Needham analysts have increased their fourth-quarter 2024 Cloud revenue estimates by 7%, bringing it to $12.1 billion. This surge in Cloud revenue is expected to nearly double the operating income estimate for the Cloud segment to $2.0 billion.
Looking ahead, the strong trends in the Cloud business are anticipated to persist into the fiscal years 2025 and 2026. Consequently, the analysts have raised their estimates for these periods and adjusted the price target accordingly to reflect the anticipated growth and robust performance of Alphabet's Cloud division.
In other recent news, Truist Securities has maintained a Buy rating on Alphabet shares, anticipating promising fourth-quarter 2024 results. The firm expects Alphabet's revenue to rise by low double-digits, driven by robust engagement in Search and YouTube, as well as steady growth in its Cloud business. Alphabet's operating margins are projected to exceed 30%, with operational expenditure containment likely offsetting higher capital expenditures.
In addition, Alphabet and Apple (NASDAQ:AAPL) are under investigation by the UK's Competition and Markets Authority (CMA) over potential dominance in mobile services. The probe aims to determine if their control over mobile operating systems, app stores, and web browsers creates unfair barriers for competitors. Alphabet's Google has also committed to tackling fraudulent reviews, implementing sanctions to discourage businesses from profiting from deceitful reviews.
In partnership news, Samsung Electronics Co (F:SAMEq). is collaborating with Google to develop augmented reality glasses. Google's CEO Sundar Pichai aims to expand the user base of the company's Gemini AI chatbot to 500 million by the end of 2025. These developments represent recent changes affecting the operations and market position of Alphabet and Google.
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