Google-parent Alphabet posted strong second-quarter numbers that had many Wall Street analysts gushing. The company reported a 7% year-over-year revenue increase to $74.6 billion alongside adjusted earnings per share of $1.44. Analysts polled by Refinitiv forecasted $1.34 per share and $72.82 billion in revenue. A key driver for those results was Google Cloud, which saw revenue surge 28% year over year to $8.03 billion. That’s above a StreetAccount forecast of $7.87 billion. Alphabet shares traded more than 6% higher Wednesday. The stock is also up more than 38% year to date, and some analysts see even more gains ahead after the latest results. GOOGL 1D mountain GOOGL pops after earnings Morgan Stanley’s Brian Nowak increased his price target on Alphabet stock to $155 per share, or roughly 27% upside, and reiterated an overweight rating. Nowak highlighted the strong growth in Google’s Cloud segment which could help add to the premium price on the stock. “The extent to which Google Cloud (and GCP) can grow structurally faster from the likely AI-driven adoption acceleration of public cloud would likely lift the multiple investors are willing to pay for GOOGL,” Nowak said. Google unveiled earlier this year its Bard chatbot in an effort to keep up with competition from Microsoft-backed OpenAI and others. Goldman Sachs analyst Eric Sheridan reaffirmed a buy rating on Alphabet stock, with his $152 price target implying more than 24% upside. “While questions will remain about AI’s impact on core products (e.g. if such a shift can be disruptive over the short-term) or costs structure (e.g. if computing costs per search will rise), we see Alphabet as the leader in compounded AI investment in the past 5-6 years and well positioned to capitalize on this trend in the coming decade,” Sheridan said. Meanwhile, Bank of America’s Justin Post also reiterated his buy rating on Alphabet with a $146 per share price target, implying 19% upside from Tuesday’s close, and highlighted strength in the company’s search and YouTube businesses. “In our view, the quarter helped address relative revenue growth concerns vs peers with accelerating Search and YouTube growth, and had ad results/commentary supporting our thesis that Alphabet will be a net beneficiary of AI,” Post said. Citi’s Ronald Josey maintained a buy rating on with a higher $153 price target, which amounts to more than 25% upside for Alphabet stock. Josey noted that Citi expects margins to expand as ad spending rebounds. “As revenue growth reaccelerates on an improving online advertising environment and management’s greater focus on operating efficiencies, we look for margins to expand going forward as revenue growth consistently outpaces opex growth,” Josey said. Others were less sanguine on the report. Wells Fargo analyst Ken Gawrelski reiterated an equal weight rating on Alphabet stock on Wednesday, although with an increased $121 per share price target. Still, his new forecast implies roughly 1% downside from Tuesday’s close. The analyst highlighted Alphabet’s growth in Google search as well as YouTube, and also pointed to a jump in Google Cloud Services revenue which climbed 28% year-over-year. However, he also noted he sees an “upcoming DOJ search distribution case scheduled for September as likely overhang on shares.” — CNBC’s Michael Bloom contributed reporting.
