Raymond James reiterates Outperform rating on Alphabet stock, citing AI momentum

Published 22/07/2025, 12:44
Raymond James reiterates Outperform rating on Alphabet stock, citing AI momentum

Investing.com - Raymond (NSE:RYMD) James has reiterated its Outperform rating and $185.00 price target on Alphabet (NASDAQ:GOOG), expressing tactical positivity on the stock’s setup. Currently trading at $191.15, the tech giant boasts a market capitalization of $2.31 trillion and maintains strong financial health according to InvestingPro metrics. Notably, 12 analysts have recently revised their earnings expectations upward for the upcoming period.

The firm’s analysis indicates an unexpected uptick in Vertex/Google Cloud Platform momentum, which was cited as the primary reason behind recent Azure migrations according to their checks. Raymond James also notes that GCP is emerging as an important secondary source for customers facing Claude token constraints at AWS Bedrock. This growth contributes to Alphabet’s impressive 13.07% year-over-year revenue growth, with InvestingPro analysis suggesting the company remains undervalued despite trading at a P/E ratio of 20.97.

The research highlights a "Buy the traffic dip" mentality among SEO advertisers who are experiencing reduced organic traffic due to AI Overview (AIO) and AI Overviews with links to More info (AIM). Their bottoms-up analysis shows low-single-digit percentage clicks growth pressured by AIM rollout, while queries and impressions accelerate.

Regarding the ongoing Department of Justice trial, Raymond James interpreted closing comments as somewhat "dovish," with Judge Mehta’s remedy ruling expected in August 2025. The firm believes the ruling could be fairly manageable, potentially taking more of a wait-and-see approach with increased oversight.

Raymond James sees potential for Alphabet’s narrative to shift from "AI Laggard to AI Leader" and recommends long positions, suggesting that indications of accelerating AI search momentum, relative AI cost inflation resilience, and manageable DoJ headwinds could drive a positive re-rating towards peers. With earnings scheduled for July 23, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports, which offer exclusive metrics and expert perspectives on Alphabet’s financial health and growth potential.

In other recent news, Google (NASDAQ:GOOGL) DeepMind’s Gemini AI system has achieved a gold medal at the 2025 International Mathematical Olympiad, solving five out of six problems perfectly and earning 35 out of 42 possible points. This marks a significant improvement from the previous year when Google’s combined AlphaProof and AlphaGeometry 2 systems earned a silver medal. Additionally, Google is introducing new AI capabilities to its Search platform with the rollout of Gemini 2.5 Pro, which includes advanced features like Deep Search for enhanced reasoning and research. These updates are initially available to AI Pro and AI Ultra subscribers. In a collaboration with Rivian Automotive (NASDAQ:RIVN) Inc, Google is integrating Google Maps into Rivian’s navigation system, maintaining Rivian’s unique in-car design elements. Google’s AI agent, Big Sleep, has also successfully detected and prevented a cybersecurity exploit involving an SQLite vulnerability, marking a first in AI-driven cybersecurity intervention. Meanwhile, Cognition has acquired AI coding startup Windsurf after a failed $3 billion acquisition by OpenAI, with all Windsurf employees financially participating in the transaction. Key executives from Windsurf are set to join Google following the acquisition.

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