Cigna earnings beat by $0.04, revenue topped estimates
Investing.com - RBC Capital raised its price target on Alphabet (NASDAQ:GOOGL) to $220.00 from $200.00 on Thursday, while maintaining an Outperform rating following the company's second-quarter results. According to InvestingPro data, 16 analysts have recently revised their earnings estimates upward, with the stock currently trading at $190.23.
The Google parent company delivered what RBC described as "a very good" quarter that exceeded elevated expectations, with beats across every revenue segment and margin upside excluding a one-time legal settlement. The company's strong performance is reflected in its impressive 13.07% revenue growth and robust financial health score of "GREAT" on InvestingPro.
RBC highlighted that management effectively demonstrated how artificial intelligence is driving durable Search growth, even in cases where click volumes aren't necessarily increasing—addressing a key concern in the AI bear case against the company.
The firm noted that Google Cloud accelerated with significant margin improvements, while capacity constraints and increased capital expenditure plans suggest further growth potential in the cloud segment.
RBC also pointed to Alphabet's margin efficiency, particularly in cloud operations, as evidence that AI investment decisions are being made with clear return-on-investment signals, though the stock may now await Judge Mehta's antitrust decision before seeing potential multiple expansion.
In other recent news, Google's introduction of the Aeneas AI model marks a significant advancement in the study of ancient Latin inscriptions. This new tool enhances capabilities by searching for textual parallels, restoring damaged texts, and predicting the origins of inscriptions. Meanwhile, Meta Platforms (NASDAQ:META) has bolstered its AI team by hiring three researchers from Google DeepMind, known for their work on Google's Gemini model. In the financial arena, KeyBanc Capital Markets has reiterated its Overweight rating on Alphabet, citing potential AI-driven upside ahead of Google's second-quarter earnings report. Despite facing regulatory scrutiny from the UK's Competition and Markets Authority over its mobile platforms, Google maintains a stable search business. Analyst Gene Munster from DeepWater Asset Management expects Google's search revenue to grow 9% year-over-year in the upcoming June quarter. This growth comes amidst rising competition from AI chatbots like ChatGPT.
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