TD Cowen cuts Alphabet price target to $220, maintains Buy

On Wednesday, TD Cowen adjusted its outlook on Alphabet stock (NASDAQ:GOOGL), decreasing the price target to $220 from the previous $225. The firm, however, continues to recommend a Buy rating for the tech giant’s shares. With a market capitalization of $2.34 trillion and a PEG ratio of 0.6, InvestingPro data suggests the stock is trading at an attractive valuation relative to its growth potential. The adjustment follows Alphabet’s recent earnings report, which presented a mixed performance across its various business segments.

In a detailed statement, TD Cowen analysts pointed out that Alphabet’s total revenue was in line with consensus estimates, with Search and YouTube revenues slightly exceeding expectations by 1% and 2%, respectively. The company’s overall revenue growth reached 14.38% year-over-year, maintaining its strong market position. Conversely, the Cloud segment did not meet analyst projections, falling short by approximately 2%. Despite this, Cloud revenue saw a substantial year-over-year increase of 30%, even amid capacity limitations tied to Generative AI technologies.

The firm also observed that Alphabet’s operating income (GAAP) was 2% higher than consensus estimates. With an impressive EBITDA of $123.47 billion and a "GREAT" financial health score from InvestingPro, which provides detailed analysis of 12+ key financial metrics and trends, the company maintains robust operational efficiency. This is seen as a positive sign, amidst the company’s anticipation of a significant 43% increase in capital expenditures for 2025, which is notably higher than what analysts had estimated.

At the heart of Search’s continued success, according to TD Cowen, are AI Overviews that have been instrumental in driving user engagement. In light of the recent financial results and market performance, the analysts have made slight adjustments to their long-term estimates for Alphabet, leading to the new price target of $220, while reaffirming their confidence in the stock with a Buy rating.

Alphabet’s stock experienced a 7% decline in after-hours trading following the earnings report. Despite the mixed results, TD Cowen’s reiteration of a Buy rating suggests a belief in the company’s ongoing potential for growth and profitability.

In other recent news, Alphabet Inc. has been the subject of multiple analyst reports. RBC Capital maintained an Outperform rating on Alphabet while expressing optimism about the company’s AI initiatives, despite a shortfall in cloud revenue and a significant increase in capital expenditure forecasts. UBS, on the other hand, reduced Alphabet’s stock target to $209, maintaining a neutral rating, due to uncertainties surrounding Alphabet’s increased capital expenditure and potential challenges in its financial services advertising spend.

Truist Securities also adjusted its price target for Alphabet, reducing it to $220 but maintaining a Buy rating. The firm cited Alphabet’s solid market position and potential growth in the AI domain as reasons for their optimism. Stifel analysts echoed this sentiment, maintaining their Buy rating and $225 price target, highlighting Alphabet’s commitment to expanding its technical infrastructure and benefiting from AI developments.

Lastly, Cantor Fitzgerald adjusted its price target for Alphabet to $200, maintaining a Neutral rating, citing risks to the core Search business due to competition and antitrust concerns. These reports highlight recent developments in Alphabet’s financial and market situation.

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