Buy Rating Affirmed for Alphabet Amid Strong Q2 Performance and Strategic Growth Investments

Youssef Squali, an analyst from Truist Financial, maintained the Buy rating on Alphabet Class A (GOOGL – Research Report). The associated price target was raised to $196.00.

Youssef Squali has given his Buy rating due to a combination of factors including Alphabet’s robust second-quarter performance and substantial investments in high-growth priorities. Squali highlights Alphabet’s strong results in Search and Cloud segments, which have shown sustained strength with improving margins. Despite aggressive investments, particularly in artificial intelligence (AI), technological infrastructure, and YouTube, Alphabet has managed to exhibit early signs of increased user engagement and potential for higher monetization in Search. The company’s positioning at the forefront of the AI race is expected to drive longer-term growth and create shareholder value.

Moreover, Alphabet’s financial metrics surpassed Street expectations, especially in areas like Google Cloud, Subscriptions, Platforms and Devices, and Search & Other, contributing to an overall revenue growth of 14% year-over-year. This performance indicates Alphabet’s resilience amidst economic fluctuations and minimal impact from foreign exchange rates. Squali also points out Alphabet’s earnings per share (EPS) exceeded consensus, while the company maintained a healthy dividend payout across its share classes, reinforcing its fiscal strength. The company’s willingness to exceed anticipated capital expenditures further emphasizes its commitment to growth, supporting Squali’s optimistic outlook on the stock.

According to TipRanks, Squali is a 5-star analyst with an average return of 13.0% and a 54.41% success rate. Squali covers the Communication Services sector, focusing on stocks such as Meta Platforms, Alphabet Class A, and Cimpress.

In another report released today, BMO Capital also reiterated a Buy rating on the stock with a $222.00 price target.

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Alphabet Class A (GOOGL) Company Description:

Alphabet is a holding company, with Google, the Internet media giant, as a wholly owned subsidiary. Google accounts for 99% of Alphabet’s revenue, of which, substantial revenue is generated from online ads. Google’s other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud services fees and other licensing revenue. Google also sells hardware products like Chromebooks, the Pixel smartphone, and smart homes products, which include Nest and Google Home. Alphabet’s Other Bets business is comprised of moonshot investments in Access, Calico, CapitalG, GV, Verily, Waymo, X and others.

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