Analysts at Oppenheimer & Co Inc have increased their price target for Alphabet Inc (NASDAQ:GOOG) after Google's parent company reported first-quarter results that showed encouraging advertising trends and a positive performance from Search.
The analysts maintained an ‘Outperform’ rating on the stock with a price target of US$145, up from $135 previously. Alphabet shares are currently trading at US$103.58.
The analysts noted that Alphabet’s net revenue for the three months to March 31, 2023, came in 4% above their estimates and 2% above Wall Street’s expectations, while revenue from Cloud Computing Services was in line.
Additionally, they said YouTube shows signs of stabilising versus 4Q 2022, with improved monetization of shorts and growing engagement.
New artificial intelligence (AIR) products and integration will be announced at the Google I/O annual developer event on May 10, they added.
Profit margins are likely to benefit from a 5% headcount reduction, the analysts said, with the first layoffs expected to begin in 2Q, while they forecast a 2% increase in operating expenditure per employee (opex/head), driving a roughly 200 basis point sequential margin improvement.
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