Bernstein analyst Mark Shmulik has elevated the price target for Alphabet (GOOG, Financial) shares from $165 to $185, while maintaining a Market Perform rating. This adjustment follows Alphabet's recent financial performance, which met the reduced expectations for the first quarter. However, the company has not provided significant insights into how broader economic conditions and tariffs could affect its operations throughout the year.
The analyst highlights the company's commitment to advancing in artificial intelligence. Alphabet reports having 1.5 billion monthly users for its AI-focused Overviews, a notable achievement compared to its 2 billion daily search users. Importantly, Alphabet has not lost market share to competitors like ChatGPT in the commercial search arena, underscoring its strong position in the sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 17 analysts, the average target price for Alphabet Inc (GOOG, Financial) is $204.53 with a high estimate of $234.00 and a low estimate of $173.00. The average target implies an upside of 26.67% from the current price of $161.47. More detailed estimate data can be found on the Alphabet Inc (GOOG) Forecast page.
Based on the consensus recommendation from 22 brokerage firms, Alphabet Inc's (GOOG, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Alphabet Inc (GOOG, Financial) in one year is $197.29, suggesting a upside of 22.18% from the current price of $161.47. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Alphabet Inc (GOOG) Summary page.
GOOG Key Business Developments
Release Date: February 04, 2025
- Alphabet Revenue: $350 billion for 2024, up 14% year-over-year.
- Q4 Revenue: $96.5 billion, a 12% increase year-over-year.
- Google Services Revenue: $84.1 billion in Q4, up 10% year-over-year.
- Google Cloud Revenue: $12 billion in Q4, a 30% increase year-over-year.
- YouTube Advertising Revenue: $10.5 billion in Q4, up 14% year-over-year.
- Operating Income: $31 billion in Q4, a 31% increase year-over-year.
- Operating Margin: Increased to 32% in Q4.
- Net Income: $26.5 billion in Q4, a 28% increase year-over-year.
- Earnings Per Share (EPS): $2.15, a 31% increase year-over-year.
- Free Cash Flow: $24.8 billion in Q4 and $72.8 billion for the full year 2024.
- Cash and Marketable Securities: $96 billion at the end of Q4.
- CapEx: $14 billion in Q4, primarily for technical infrastructure.
- Share Repurchases: $15 billion in Q4, totaling nearly $70 billion for 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alphabet Inc (GOOG, Financial) reported strong revenue growth, with a 12% increase in Q4 2024, driven by robust performance in Google Search and Cloud.
- The company achieved a significant milestone with its Cloud and YouTube businesses, reaching a combined annual revenue run rate of $110 billion.
- AI advancements, including the launch of Gemini 2.0, have enhanced product capabilities and driven increased consumer and developer engagement.
- Google Cloud saw a 30% revenue increase, with strong demand for AI-powered solutions and strategic deals over $1 billion.
- YouTube continues to lead in streaming watch time in the US, with significant growth in ad revenue, particularly from election-related content.
Negative Points
- Network advertising revenue declined by 4%, impacting overall advertising growth.
- The company faces capacity constraints in its Cloud segment, limiting potential revenue growth despite high demand.
- Foreign exchange rates and the absence of a leap year are expected to negatively impact Q1 2025 revenue.
- Increased capital expenditure, projected at $75 billion for 2025, may pressure profitability due to higher depreciation costs.
- Alphabet Inc (GOOG) anticipates challenges in maintaining growth in the financial services vertical, particularly in the insurance segment.
