Analysts at Oppenheimer & Co Inc have lowered their revenue expectations for Alphabet Inc (NASDAQ:GOOG)’s Google Cloud Platform (GCP) segment while raising their 2023 operating income expectations on the company’s recently announced workforce reduction ahead of its 4Q results.
The analysts maintained an ‘Outperform’ rating on the stock with a price target of US$135. Alphabet shares are currently trading at US$91.14.
In a note to clients, the analysts said they were updating their GCP expectations while the rest of their model was unchanged.
READ: Google appeals US$157mln Indian fine as it says authorities copied EU template
They noted that GCP revenue expectations for 2023 have declined 100 basis points to plus 31% year-over-year. “We think this is from GCP outperforming the previous two quarters, partially from smart steps with channel partners,” they wrote.
“We are expecting GCP to hit free cash flow break even by 2024, two years early, given press reports about this goal and the scale it's now at.”
The analysts also updated their Macro Ad Forecast, forecasting two basis points (bps) of share loss in 2023 and 14 basis points in 2023 due to Alphabet’s limited exposure to connected TV (CTV) and no exposure to retail media.
“Excluding CTV, we estimate GOOG’s share will increase 70bps in 2023E and 14bps in 2024E,” they wrote.
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie