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Investing.com - Stifel has raised its price target on Alphabet (NASDAQ:GOOGL) stock to $333.00 from $292.00 while maintaining a Buy rating, citing strong performance in the company’s Cloud segment. The new target represents potential upside from the current price of $274.57, which sits just 1% below the stock’s 52-week high of $275.34. InvestingPro data shows Alphabet’s PEG ratio at 0.77, suggesting the stock may be trading at a reasonable valuation relative to its growth prospects.
The research firm highlighted Google Cloud as the standout performer in Alphabet’s third quarter results, with revenue growth accelerating by 184 basis points. Cloud backlog grew 46% quarter-over-quarter, with year-over-year growth accelerating by more than 4000 basis points, while operating margins continued to improve. This performance contributes to Alphabet’s overall revenue of $371.4 billion with a 13.13% growth rate over the last twelve months.
Alphabet’s advertising business also outperformed expectations, particularly YouTube, where growth on new surfaces like Connected TV (CTV) and Shorts contributed to revenue acceleration. Stifel noted that Shorts is now monetizing better than traditional YouTube content.
Despite healthy top-line performance across both Ads and Cloud segments, corporate-level operating margins came in slightly lighter than expected. Management raised fiscal year 2025 capital expenditure guidance by $7 million at the midpoint and expects a "significant" capex increase in 2026. Nevertheless, InvestingPro analysis rates Alphabet’s overall financial health as "GREAT" with a score of 3.46, reflecting the company’s strong balance sheet and cash flow generation capabilities. The Pro Research Report available for Alphabet is part of the comprehensive analysis offered for 1,400+ top US equities.
Stifel expressed growing confidence in Alphabet’s positioning in artificial intelligence, stating that investors are becoming more comfortable with Google’s place in "this new era of compute," though the firm believes "there is still more to go here." Analyst consensus is aligned with this optimistic outlook, with a strong buy recommendation (1.52) and a high target of $340 among analysts tracked by InvestingPro, which offers additional insights through 18 ProTips for Alphabet stock.
In other recent news, Alphabet has reported a milestone in its financial performance, with quarterly revenue surpassing $100 billion for the first time. This achievement was accompanied by an operating income margin of 33.9%, excluding a $3.5 billion fine from the European Commission. HSBC has responded to Alphabet’s robust cloud growth by raising its price target to $335, noting a significant increase in Google Cloud’s revenue backlog to $155 billion. Canaccord Genuity also increased its price target to $330, maintaining a Buy rating due to the company’s strong third-quarter results. Baird raised its price target to $310, highlighting the positive impact of generative AI on Alphabet’s core businesses. DA Davidson increased its price target to $300, citing continued acceleration in Google Cloud services. Citizens reiterated its Market Outperform rating and $290 price target, emphasizing strong demand for Alphabet’s AI infrastructure. These developments reflect a period of significant growth and strategic advancement for Alphabet.
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