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On Thursday, TD Cowen reaffirmed its positive stance on Alphabet (NASDAQ:GOOGL) Inc. (NASDAQ:GOOG) shares, maintaining a Buy rating and a price target of $195.00. Currently trading at $177.44, Alphabet’s stock shows potential upside according to InvestingPro Fair Value calculations. With an impressive "GREAT" financial health score and 12 additional ProTips available on InvestingPro, the company maintains a strong market position. The firm’s analyst highlighted the company’s growth prospects, particularly in the autonomous vehicle (AV) sector, following a detailed report on the market and the introduction of an operational model for Alphabet’s subsidiary Waymo.
The updated sum-of-the-parts (SOTP) valuation model for Alphabet includes a segment-by-segment analysis, with a significant focus on Waymo. The model projects that Waymo’s U.S. gross bookings will increase from $230 million in 2025 to $6.1 billion in 2034, representing a compound annual growth rate (CAGR) of 44% from 2025 to 2034. As a result, Waymo is now valued at an enterprise value (EV) of $60 billion. This growth potential complements Alphabet’s strong fundamentals, with revenue reaching $359.71 billion in the last twelve months and maintaining a healthy gross profit margin of 58.59%.
The analyst’s commentary pointed out that while Alphabet’s Search segment remains a major driver of valuation due to its substantial contribution to revenue and EBITDA, other segments also present opportunities for value appreciation. The Cloud segment, valued at 8 times its estimated 2026 EV/Sales, could see an increase in value if a multiple of 11, in line with Microsoft (NASDAQ:MSFT), were applied, potentially adding approximately 7% to Alphabet’s EV.
Additionally, DeepMind and general artificial intelligence (GenAI) segments are considered areas with significant growth potential. DeepMind/GenAI is currently valued at $150 billion, while a competitor, OpenAI, was recently valued at $300 billion as of March 21, 2025. Given Alphabet’s extensive investment and integration of GenAI across its businesses, there is an anticipation of potential upside, especially considering the expected societal impact of GenAI.
The analyst’s reiteration of a Buy rating and a $195 price target reflects confidence in Alphabet’s diversified portfolio and its capacity to drive shareholder value through its various innovative segments. With a P/E ratio of 18.85 and strong return metrics, including a 35% return on equity, the company demonstrates solid financial performance. For deeper insights into Alphabet’s AI initiatives and comprehensive valuation analysis, access the full InvestingPro Research Report, which provides expert analysis of this leading tech company’s growth prospects and market position.
In other recent news, Alphabet Inc. has been the focus of significant developments, particularly following its Google I/O 2025 event. Both Evercore ISI and JPMorgan have maintained positive ratings on Alphabet, with price targets of $205 and $195, respectively, citing advancements in artificial intelligence as a key factor. At the event, Google introduced the Gemini 2.5 family, which has contributed to a substantial increase in the company’s AI token processing. The company also launched the TPU v7 Ironwood, a new Android XR platform, and updated its AI Mode for Search, showcasing its ongoing innovation in AI technology.
Google’s NotebookLM mobile app has been launched for both Android and iOS, aiming to help users engage with complex information on the go. The app includes features like offline Audio Overviews and interactive host sessions, with plans for further enhancements. Additionally, Uber (NYSE:UBER) is piloting early access to Waymo rides in Atlanta, marking a significant step in autonomous vehicle technology. Waymo, a subsidiary of Alphabet, is collaborating with Uber to refine the service before a full launch later this summer.
These developments underscore Alphabet’s continued focus on AI integration across its platforms and services, which has been recognized as a strength by analysts. Upcoming events such as Google Marketing Live and the Made by Google event are anticipated to provide further exposure to new products and innovations.
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