On Wednesday, BMO Capital Markets has adjusted its stock price target for Alphabet Inc (NASDAQ: NASDAQ:GOOGL), increasing it slightly to $217 from the previous $215, while retaining an Outperform rating on the shares. This adjustment reflects the company's robust performance in key business areas.
The analyst from BMO Capital Markets highlighted that Alphabet's cloud revenue has seen another acceleration, driven by artificial intelligence (AI) workloads and security offerings that stand out in the market. Moreover, the company's search monetization efforts are yielding results beyond expectations, with additional growth anticipated from AI Overview Ads on mobile, which is expected to expand globally after 2025.
Alphabet's video platform, YouTube, has also shown promising signs of growth. The improved outlook is attributed to the enhancements in monetizing YouTube Shorts, the platform's short-form video feature. This is seen as a positive development for Alphabet's revenue diversification.
Further observations by the analyst include a moderation in capital expenditures (CAPEX) on a quarter-over-quarter basis, a trend that is projected to continue into 2025. The revised CAPEX estimates for Alphabet are now set at $57 billion for 2024 and $63 billion for 2025, up from the previous forecasts of $55 billion and $60 billion, respectively.
In summary, the analyst reaffirmed the Outperform rating for Alphabet and raised the estimates and target price to $217, citing the company's strong performance in cloud and search, as well as the potential for future growth in these areas.
In other recent news, Alphabet Inc. has been the center of several positive adjustments by analysts following robust third-quarter earnings. Piper Sandler raised Alphabet's price target from $200 to $210, emphasizing the company's mid-teens revenue growth and the strong performance of its Cloud services and YouTube subscriptions.
Similarly, Truist Securities and Canaccord Genuity upgraded Alphabet's price target to $225, highlighting the company's growth in its Search, Cloud, and Devices segments. Cantor Fitzgerald maintained a Neutral rating with a consistent price target of $190, citing potential risks associated with antitrust litigation and AI-related challenges.
The company's third-quarter earnings exceeded expectations, driven by the strength of Alphabet's cloud business and YouTube advertising sales. Significant advancements in artificial intelligence (AI) have also contributed to the growth of its Cloud and YouTube segments. Alphabet's investments in AI and YouTube were particularly noted as key growth drivers by analysts.
In addition, Alphabet recently led a $110 million investment in Nigerian fintech firm Moniepoint. Despite these positive developments, analysts from multiple firms cautioned about potential regulatory challenges and competition in the AI space. These are the recent developments for Alphabet Inc., providing investors with valuable insights into the company's performance and potential future growth.
InvestingPro Insights
Complementing BMO Capital Markets' optimistic outlook on Alphabet Inc (NASDAQ: GOOGL), recent data from InvestingPro reinforces the company's strong market position and financial health. With a substantial market capitalization of $2.1 trillion, Alphabet continues to be a dominant force in the tech industry.
InvestingPro Tips highlight that Alphabet holds more cash than debt on its balance sheet, indicating robust financial stability. This aligns with the analyst's observations on moderated capital expenditures, suggesting prudent financial management. Moreover, the company's P/E ratio of 24.38 is considered low relative to its near-term earnings growth, potentially signaling an attractive valuation for investors.
Alphabet's revenue growth of 13.38% over the last twelve months, coupled with a strong EBITDA growth of 34.59%, underscores the company's ability to expand its business and improve profitability. This growth trajectory supports BMO's positive stance on Alphabet's cloud and search performance.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips on Alphabet, providing deeper insights into the company's financial health and market position.
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