Google owner Alphabet Inc (NASDAQ:GOOG), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc (NASDAQ:AAPL) all received hefty price upgrades today after the tech trio announced bumper earnings last night.
UBS raised its target on Alphabet to US$3,190 from US$2,600 compared to a current share price of US$2,638 after what the broker said overall were positive second-quarter numbers.
“While GOOG's digital ad business clearly benefited from a strong ad backdrop, both brand & DR, we still see ample room for advertisers to continue to diversify their spend across GOOG properties as digital ad spend continues to play catch up to the pandemic driven an increase in eCommerce penetration”
UBS now expects net earnings in 2021 of US$66.7bn, up 65% from US$40.2bn, with revenues of US$205bn against US$150bn.
Microsoft Corporation (NASDAQ:MSFT) meanwhile saw its share price fall on its earnings update, though Goldman Sachs (NYSE:GS) says the guidance for cloud arm Azure was better than in tally thought and its price target goes up to US$360 from US$340.
“Commercial cloud, which is a superset of Azure, including commercial Office 365, LinkedIn and Dynamics accelerated by 200 bps sequentially to 31% yoy cc growth reaching nearly $80bn run rate, thereby giving us more conviction in our thesis that this business unit is on track to generating $120-140bn, likely 1-2 years ahead of our initial expectations at the time of our January initiation.
“With a strong presence across all layers of the cloud stack, including applications, platforms, and infrastructure, Microsoft is well-positioned to capitalize on a number of long-term secular trends, including public cloud and SaaS adoption, digital transformation, AI/ML, BI/analytics, and DevOps (amongst others).
For the current year to end June 2022, Goldman expects revenues of US$193bn (US$168bn), with earnings of US$80.5bn (US$69.9bn) with a price target of US$360 against a market price of US$286.54.
“Despite our optimism heading into the qtr, strength was more broad-based than we expected. As such, we raise FY21 revenue and EPS estimates to US$364Bn from US$356Bn, and eps of US$5.53 from US$5.15.
“Going forward, we expect iPhone ASPs to continue to increase despite more modest unit growth in FYQ4 and FY22 as consumers have demonstrated a propensity for both the Max and ProMax models that carry higher ASPs and GMs.”
UBS’ price target rises to US$175 from US$166 against a market price of US$146.77.