Alphabet Inc (NASDAQ:GOOG)’s disappointing cloud growth forecast has Wall Street analysts divided on the outlook for the company’s stock performance going forward.
Jeffries analysts seemed the most upbeat, believing the company's accelerating Search and YouTube growth will more than offset its slower cloud sales.
They expect better AI impact on Alphabet’s 2024 results even as the industry’s challenge in ramping up AI infrastructure may be a factor in slowing recognized revenues.
Analysts at Jeffries maintained their ‘Buy’ rating on the stock with a $165 per share price target.
Bank of America analysts, meanwhile, also highlighted Alphabet’s strong recovery in Search while noting it was a "tough night" to report a cloud miss.
"Cloud growth will be an overhang given Microsoft’s Azure beat, but its advertising business is on track and positioned to see operations leverage," the analysts wrote.
They reiterated their 'Buy’ rating on the stock while raising their price objective slightly to $149 per share from $146 based on higher 2024 core earnings per share and an unchanged 20 times 2024 price-to-earnings multiple, plus cash.
Finally, analysts at UBS noted that Alphabet’s strong revenue growth was "overwhelmed by a downtick on the extent of its commitment to margin expansion."
"We think the biggest take from 3Q results was a slight downtick around the cost outlook and the rigor with which the company will adhere to 'cost growth below revenue growth' comments initially made in 3Q22 when top line grew 6% versus operating expenses growth of 26%," they wrote.
UBS analysts maintained their ‘Neutral’ rating and $150 per share target price on Alphabet stock.
Contact Sean at sean@proactiveinvestors.com