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On Wednesday, UBS analyst Stephen Ju adjusted the price target for Alphabet (NASDAQ:GOOGL) stock, reducing it to $209 from the previous $211, while keeping a Neutral rating on the shares. Currently trading at $191.27 with a market capitalization of $2.35 trillion, Alphabet remains one of the world’s most valuable companies. The revision follows Alphabet’s recent capital expenditure (CapEx) guidance for 2025, which is set at $75 billion—$15 billion more than what investors had anticipated.
Ju’s report highlighted that with Alphabet’s 2025 revenue forecast remaining essentially the same as before the fourth quarter of 2024, questions arise about the new products that could justify the increased investment levels. According to InvestingPro data, Alphabet maintains strong financial health with a "GREAT" overall score and impressive revenue growth of 14.38% over the last twelve months. The company’s CapEx guidance has sparked a renewed focus on the Return on Invested Capital (ROIC) debate. Despite reporting in-line search results, Alphabet has signaled potential challenges ahead, including tougher financial services advertising spend comparisons in 2025 and a shortfall in Google Cloud Platform (GCP) attributed to supply constraints.
The analyst pointed out that while there is some insight into where the additional CapEx will be allocated, it remains uncertain how Google will enhance monetization from AI overviews versus current search engine result pages (SERPs) or the timeline for resolving GCP’s supply issues. These uncertainties have led UBS to slightly lower its earnings per share (EPS) estimate for 2026 by approximately 1%, which in turn has influenced the $2 reduction in Alphabet’s price target.
Ju concluded that despite these considerations, UBS is maintaining its Neutral rating on Alphabet stock. The firm anticipates that Google’s price-to-earnings (P/E) trading multiple, currently at 25.12x, may continue to face pressure due to unresolved regulatory concerns and the potential for market share losses in its core business areas. Notably, InvestingPro analysis reveals that Alphabet is trading at a low P/E ratio relative to its near-term earnings growth, with a PEG ratio of 0.6. For deeper insights into Alphabet’s valuation and 12 additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro. Investors are advised to look for clearer signals of product development and releases before adjusting their positions.
In other recent news, Alphabet has been the subject of several adjustments in stock price targets and ratings by various analyst firms. Truist Securities reduced its price target for Alphabet to $220 while maintaining a Buy rating, citing the company’s in-line fourth-quarter performance and higher capital expenditure (Capex) guidance for fiscal year 2025. However, the firm remains optimistic about Alphabet’s prospects, particularly its strong market position and advancements in AI.
On the other hand, Stifel analysts maintained their Buy rating and $225.00 price target for Alphabet, highlighting the company’s significant planned Capex and the potential growth in the realms of AI and Connected TV (CTV). Meanwhile, Cantor Fitzgerald adjusted its price target for Alphabet to $200, maintaining a Neutral rating on the company’s shares. The firm’s analyst noted that Alphabet’s fourth-quarter performance aligned with Wall Street’s revenue estimates, with earnings before interest and taxes (EBIT) and earnings per share (EPS) being 2% higher than expected.
Guggenheim Securities increased the price target for Alphabet to $220, reiterating a Buy rating. The adjustment followed Alphabet’s fourth-quarter earnings report, which aligned with Guggenheim’s and the consensus estimates for overall revenue and operating profit. Lastly, Canaccord Genuity reiterated its Buy rating and $225.00 price target for Alphabet, following the tech giant’s release of its fourth-quarter earnings report. The firm’s analyst suggests that Alphabet’s leadership in product innovation will facilitate the successful integration of AI into its search business.
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