Oppenheimer & Co analysts have increased their target price on Alphabet Inc (NASDAQ:GOOG) Class C (GOOG) shares to $160 from $145, while maintaining an ‘Outperform’ rating on the stock, on improving ad trends and margin improvement, as Search and YouTube growth accelerated sequentially and cost savings begin to flow through to its financials.
In an update to clients, they also noted the company’s artificial intelligence (AI) initiatives are progressing, as Alphabet’s generative AI integration into Search came in ahead of expectations, with 80% of advertisers using at least one AI product.
"(Alphabet’s) retail strength continued, with (its) brand returning to growth, indicating further stabilization in ad market," the analysts wrote.
They added that Alphabet’s management is already seeing improved efficiency and potential for higher monetization and query growth.
Analysts at Oppenheimer also wrote that Google Cloud is approaching profitable growth, as it is the third-largest cloud provider.
With roughly 70% market share, Alphabet Inc (NASDAQ:GOOG) is by far the US leader in search advertising, which remains the most effective advertising medium that exists today based on the paid-click advertising model, they concluded.
GOOG shares climbed nearly 6% to $129.66 in late-morning trading on Wednesday while surging 45% year to date.
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