Alphabet's AI Integration Winning Over 5 Analysts: Q2 Results Spark Optimism Despite Market Challenges

Shares of Alphabet Inc GOOG GOOGL spiked in early trading on Wednesday, even as the company is facing increasing threats from ChatGPT and plans by competing tech giants to create open maps.

Alphabet also reported its second-quarter report, with revenue and operating income ahead of the consensus estimates. This came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

KeyBanc Capital Markets On Alphabet

Analyst Justin Patterson maintained an Overweight rating, while raising the price target from $140 to $145.

Alphabet's second-quarter results “reinforced” that the company’s ad business is continuing to recover, Cloud is benefiting from AI, and it's generating margin expansion, Patterson said in a note.

“Coupled with 15 properties reaching 0.5B+ users (and six reaching 2B+), we believe Alphabet still has ample levers to drive LDD% revenue growth and EPS growth,” he added.

Needham On Alphabet

Analyst Laura Martin reiterated a Buy rating, while raising the price target from $115 to $140.

The company’s second-quarter results were “strong” and ChatGPT’s “existential threat to GOOGL's Search business has awakened the sleeping giant,” Martin stated.

“GOOGL is integrating generative AI into every ad and Cloud product they offer, and into every plan on their product roadmap,” the analyst wrote. “Generative AI should make GOOGL's products stickier, with lower churn, and higher LTV,” she added.

Check out other analyst stock ratings.

JMP Securities On Alphabet

Analyst Andrew Boone reaffirmed a Market Outperform rating, while lifting the price target from $132 to $138.

“With search and YouTube revenue accelerating, we believe ad demand stabilized in 2Q23 while AI is improving return on ad spend and Alphabet’s focus on efficiency is bearing fruit with operating margins expanding 140bps Y/Y,” Boone wrote in a note.
“With 6 products that serve 2B+ people and the integration of AI across Alphabet’s product suite, we believe it has multiple catalysts ahead as AI improves the user experience and improves return on ad spend for marketers,” he added.

RBC Capital Markets On Alphabet

Analyst Brad Erickson maintained an Outperform rating, while raising the price target from $145 to $155.

Alphabet’s AI commentary “dominated the discussion with strong progress improvements given regarding models, developer interest, functionality improvements in the search generative experienced (SGE) and tailwinds for cloud,” Erickson said.

“And while capex came in below expectations for the qtr due to some timing delays, the company's outlook for FY remained unchanged which was especially encouraging in light of the accelerated rollout of generative AI solutions,” the analyst added.

Susquehanna On Alphabet
Analyst Shyam Patil reiterated a Positive rating, while lifting the price target from $120 to $150.

The company reported “solid” second-quarter results, reflecting “an improving digital ad environment” and “good expense management,” Patil said.

While visibility remains limited due to macro uncertainties, Alphabet’s business is likely to remain “relatively resilient,” the analyst stated. YouTube seems to have bottomed and “is now recovering,” he noted.

GOOG Price Action: Shares of Alphabet were up 5.75% to $129.85 at the time of publication Wednesday.

Now Read: Meta Platforms Q2 Earnings Preview: Earnings Estimates, What Analysts Are Saying, Key Factors To Watch (Including AI)

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