Alphabet Shares Are On The Rise Today: What's Going On?

Zinger Key Points

Bank of America analysts anticipate Alphabet will meet or exceed Q4 expectations, driven by strong e-commerce ad spending.
Analysts remain constructive on Alphabet’s AI-driven search revenue potential and expect further cost-cutting measures.
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Alphabet Inc.‘s GOOG stock is moving higher Friday ahead of its fourth-quarter earnings report, with analysts from Bank of America maintaining a positive outlook on the company's performance.

What To Know: The firm noted that strong e-commerce ad spending and Meta's recent ad revenue beat point to potential upside for Google's advertising business in the fourth quarter. Analysts expect Alphabet to meet or exceed expectations, with revenue projected at $81.5 billion and earnings per share at $2.12.

Bank of America analysts highlighted that search ad pricing benefited from AI-generated overview ads, contributing to potential growth. YouTube is also expected to have gained from improved AI-driven ad targeting, while Google Cloud could see a modest upside following Microsoft Azure's weaker-than-expected results. However, they cautioned that risks are tied to foreign exchange headwinds, tougher first-quarter ad comparisons, and potential margin pressure from increased hiring or capital expenditures.

With Alphabet's new chief financial officer in place, analysts expect additional cost-cutting measures and potential new disclosures regarding capital expenditures. They also pointed to regulatory developments, including the possibility of a settlement with the Department of Justice following Judge Mehta's ruling later this year. Bank of America remains constructive on the company's long-term AI monetization potential.

At its current valuation of approximately 20 times projected 2026 GAAP earnings, analysts see the stock as attractive compared to the S&P 500. Alphabet has historically traded at a premium to the index and analysts believe that the market may be underestimating the potential for AI-driven search monetization in 2025.

GOOG Price Action: Alphabet’s shares were up 1.80% at $206.28 at the time of writing, according to Benzinga pro.