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On Friday, Oppenheimer analyst Jason Helfstein increased the price target on Alphabet stock (NASDAQ:GOOGL) to $200 from the previous $185, while reiterating an Outperform rating. The adjustment reflects greater confidence in management and the positive impact of artificial intelligence (AI) on the company’s operations. According to InvestingPro data, Alphabet currently trades at 19.7x earnings, with analysts setting targets ranging from $159 to $240. The stock appears slightly undervalued based on InvestingPro’s proprietary Fair Value model.
Alphabet’s first-quarter results were characterized as solid, aligning closely with Wall Street’s expectations. The company’s Services margins were particularly notable, contributing to earnings per share (EPS) that were 7% higher than Oppenheimer’s and Street’s predictions, excluding a $10 billion unrealized gain. With a robust revenue growth of 13.9% and an impressive gross profit margin of 58.2%, the company continues to demonstrate strong operational efficiency. Helfstein highlighted the AI enhancements to Alphabet’s Search feature, which boasts 1.5 billion monthly active users (MAUs) and is generating additional commercial searches with monetization rates comparable to non-AI searches.
The company’s cloud segment was also a point of strength, growing faster than the overall segment at a rate of 28% year-over-year, compared to 30% in the previous quarter. While no quarter-to-date commentary was provided, the analyst mentioned a ’slight’ de minimis headwind and more challenging comparisons in the financial services area.
Helfstein conveyed an upbeat overall tone from the company, citing its experience in navigating past periods of uncertainty. The report also noted that depreciation is expected to accelerate through fiscal year 2025 as capital expenditures are realized in the company’s financial model.
The new price target of $200 is based on a 20 times multiple of the company’s estimated 2026 earnings per share, which is conservative compared to the 25 times multiple assigned to its peers. InvestingPro analysis reveals additional insights about Alphabet’s financial strength, with 12 key investment tips available to subscribers. The company maintains a "GREAT" financial health score, supported by strong cash flows and solid balance sheet metrics. Get access to the complete Alphabet Pro Research Report and detailed analysis of 1,400+ other stocks with an InvestingPro subscription.
In other recent news, Alphabet has reported robust first-quarter earnings for 2025, with a notable 12% revenue growth that exceeded Wall Street expectations by approximately 3%. The company’s EBITDA also surpassed estimates by about 7%, demonstrating strong performance in its Search and YouTube segments, although the Cloud division fell slightly short of some expectations. In response, several analysts have adjusted their outlooks on Alphabet. Truist Securities maintained a Buy rating with a $200 price target, while Piper Sandler raised its price target to $195, maintaining an Overweight rating. Similarly, KeyBanc Capital Markets increased its price target to $195, also keeping an Overweight rating, highlighting Alphabet’s AI distribution capabilities as a key advantage. Meanwhile, RBC Capital Markets reiterated an Outperform rating with a $200 target, citing better-than-expected margin leverage and strategic financial decisions. On the other hand, DA Davidson maintained a Neutral rating with a $160 target, noting a slowdown in growth within advertising and Google Cloud segments. Despite this, Alphabet announced a 5% increase in its annual dividend and a substantial $70 billion share repurchase program, indicating confidence in its financial health and long-term value.
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