U.S. stock futures slip lower; Cook’s firing increases Fed independence worries
On Wednesday, Scotiabank (TSX:BNS) analyst Nat Schindler revised the price target for Alphabet (NASDAQ:GOOG) stock, reducing it to $232.00 from the previous target of $240.00. Despite the adjustment, the analyst upheld a Sector Outperform rating for the tech giant. The revision came after Alphabet reported earnings that were largely in line with expectations, with top-line revenues slightly missing Wall Street estimates by a narrow margin, reporting approximately $96.5 billion against projections of $96.6 billion. Currently trading at $207.71, the stock has demonstrated impressive momentum with a 43.83% return over the past year. According to InvestingPro analysis, Alphabet maintains a "GREAT" financial health score, supported by strong fundamentals and market position.
Alphabet’s stock experienced a decline in after-hours trading, which Schindler attributed to investor expectations that were set higher, particularly in the wake of Meta (NASDAQ:META)’s earnings report from the previous week. A key takeaway from Alphabet’s earnings call was the company’s projection of around $75 billion in capital expenditure for the year 2025, with an estimated $16-18 billion expected to be spent in the first quarter. The company’s robust financial position is evident in its revenue growth of 14.38% and market capitalization of $2.53 trillion, making it one of the world’s most valuable companies.
The company also indicated that depreciation is anticipated to affect future profitability. This forecast aligns with trends observed in previous quarters and similar announcements from peers such as Meta and Microsoft (NASDAQ:MSFT). Additionally, Alphabet highlighted several factors that may influence its financial performance in 2025, including foreign exchange headwinds due to the strengthening US dollar, the lapping of strong quarters in Google (NASDAQ:GOOGL) Services ad revenue driven by financial services, and the potential variability in cloud revenue growth rates as new capacities are brought online.
While Scotiabank’s revenue projections for Alphabet remain largely the same, the firm has slightly lowered its earnings per share (EPS) expectations. This adjustment is primarily driven by the anticipated increase in depreciation expenses moving forward. Schindler’s comments suggest that these developments, particularly the capital expenditure and its impact on depreciation, were not unexpected given the broader context of the industry and recent results from other major tech companies. With analyst targets ranging from $190 to $235 and a consensus recommendation of 1.61 (Strong Buy), the stock appears to have further upside potential. For deeper insights into Alphabet’s valuation and growth prospects, including 13 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Alphabet Inc. has seen a flurry of activity with financial analysts adjusting their stock price targets. JPMorgan’s analyst Doug Anmuth lowered the price target to $220, citing the company’s fourth-quarter financial results that revealed slightly lower than expected revenue and operating income figures. Meanwhile, Scotiabank’s Nat Schindler raised the price target for Alphabet to $240, highlighting the company’s strong position in artificial intelligence (AI). On the other hand, Cantor Fitzgerald’s Maria Ripps maintained a neutral rating with a revised price target of $210, pointing to ongoing antitrust uncertainties and risks associated with AI.
In addition to these developments, Google, a subsidiary of Alphabet, announced the launch of Meridian, an open-source marketing mix model. This tool is designed to assist marketers and data scientists in making data-driven decisions when measuring outcomes across different channels.
Furthermore, Google has committed to addressing fraudulent reviews about businesses and services, as per a statement from the UK’s Competition and Markets Authority. The tech giant will introduce significant changes to its procedures and implement sanctions to discourage businesses from benefiting from deceitful reviews.
These are among the recent developments surrounding Alphabet and its subsidiaries, reflecting the dynamic nature of the company’s operations and the market’s response to its performance.
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