Google Cloud is expected to be a positive driver for its parent company Alphabet Inc (NASDAQ:GOOG)'s stock due to its leading artificial intelligence (AI) capabilities, improving margins, and expected market share gains, according to analysts from the Bank of America (BoA).
In a note to clients following the kickoff of Google’s Cloud Next event, the analysts wrote that the keynote showcased Google Cloud’s expanded AI and machine learning capabilities.
The tech giant also announced an expanded partnership with chipmaker Nvidia and the general availability of A3 Virtual machines powered by Nvidia H100 graphics processing units, the analysts noted.
Other key announcements included an expanded models library and new tools in Vertex AI and Duet AI pricing for enterprises at $30 a month per user, expected next year.
“We believe the event will help to reduce remaining overhangs on Google Cloud AI capabilities (GOOG up 3% versus Nasdaq up 2%) as Google Cloud is integrating a variety of large language models and natural language processing capabilities,” they wrote.
They also highlighted that Google Cloud has partnered with enterprise software provider SAP and human resources and finance platform Workday, indicating strong AI traction with customers.
Google Cloud’s AI projects were up 150 times in the last three months, they added.
The BoA analysts reiterated their ‘Buy’ rating on Alphabet on their view Google Cloud will be a positive driver for the stock. They awarded it a price target of US$146.
Alphabet shares traded up 0.7% at US$137.92 on Thursday morning.
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