Why Analysts Are Bullish on Google Parent Alphabet After Earnings

Key Takeaways

• Google parent Alphabet posted third-quarter earnings that topped Street expectations and showed artificial intelligence (AI) progress, with both JPMorgan and Citigroup analysts noting the tech giant’s strong Google Cloud revenue.
• JPMorgan raised its price target for Alphabet to $212 from $208 and reiterated an “overweight” rating.
• Citi analysts stuck with its “buy” rating and $212 price target, noting Google Cloud’s “accelerating growth from greater GenAI demand.”

Google parent Alphabet (GOOGL) posted third-quarter earnings that topped Street expectations and showed artificial intelligence (AI) progress, with both JPMorgan and Citigroup analysts noting the tech giant’s strong Google Cloud revenue.

JPMorgan raised its price target for Alphabet to $212 from $208 and reiterated an “overweight” rating.

The broker noted “Google’s increased confidence” in the rollout of its AI search business; its strong cloud business, with 35% year-over-year revenue growth in the quarter; and upside for operating profits given the company’s plans to “re-engineer the cost structure” as reasons behind the increased price target.

JPMorgan Notes Expanding AI Overviews Service

JPMorgan analysts said that Google’s AI Overviews service—its AI-generated search summaries—is being rolled out to 100 new countries and territories with a reach of more than a billion users per month, and is “monetizing at roughly the same rate as non-AI searches” in terms of advertising.

On the company’s earnings call, Alphabet Chief Executive Officer (CEO) Sundar Pichai said the company has seen use of Google Search rise among people who use AI Overviews, and that Google Lens is drawing 20 billion visual searches each month.

Citi analysts stuck with their “buy” rating and $212 price target for Alphabet. The broker, like JPMorgan, noted Google Cloud’s “accelerating growth from greater GenAI demand,” thanks in part to Alphabet’s Gemini large language model.

Shares of Alphabet jumped more than 5% Wednesday afternoon and have gained 28% this year.