TD Cowen reiterates Buy rating on Alphabet stock, citing AI Mode rollout

Investing.com - TD Cowen has reiterated its Buy rating and $195.00 price target on Alphabet (NASDAQ:GOOGL), highlighting the recent broad rollout of AI Mode as a potential engagement driver for the $2.12 trillion search giant. According to InvestingPro data, the stock appears undervalued at current levels, with analysts maintaining a Strong Buy consensus.

The research firm expects AI Mode will keep users on Google longer during search sessions, potentially reducing visits to third-party publishers for informational queries, while product-related searches should remain largely unaffected in the near term.

TD Cowen views Google Search as well-positioned in the current macroeconomic environment despite threats from chatbots, predicting its direct response advertising business will perform strongly through 2025 amid a resilient U.S. consumer.

Alphabet shares are down 8% year-to-date compared to the S&P 500’s 6% gain, trading at 15.4x P/E excluding cash, 9.7x EV/EBITDA, and a 5.1% free cash flow yield based on TD Cowen’s 2026 estimates.

The firm forecasts Alphabet will achieve a 10% total revenue CAGR and 14% EBITDA CAGR from 2025 to 2030, citing the company’s market-leading advertising business, scaled consumer digital platforms, and strong Cloud growth profile.

In other recent news, Alphabet Inc. has announced significant initiatives in artificial intelligence aimed at enhancing mental health treatment. The company is collaborating with organizations like Grand Challenges Canada and McKinsey Health Institute to develop a practical field guide for mental health organizations. Additionally, Google for Health and Google DeepMind are investing in AI research with Wellcome Trust, focusing on conditions such as anxiety and depression. Meanwhile, African startup Moove is nearing a $1.2 billion debt raise to expand its autonomous-driving fleet with Alphabet’s Waymo, marking a key development in its U.S. operations. In the financial sector, Truist Securities has reiterated its Buy rating on Alphabet stock, citing robust user engagement and a favorable foreign exchange environment. Conversely, DA Davidson maintains a Neutral rating but suggests a potential breakup could unlock significant value. Alphabet is also proposing changes to its search results amid EU antitrust scrutiny, addressing concerns over preferential treatment of its services. These developments underscore Alphabet’s ongoing efforts to navigate competitive and regulatory challenges while expanding its technological footprint.

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