Alphabet Stock 'Fairly Valued': Analysts See AI Disrupt As Tailwind - Alphabet (NASDAQ:GOOGL)

Analysts break down the potential impact of new products and features from Alphabet Inc. GOOGGOOGL on the stock following the company's I/O developer conference.

The Alphabet Analysts: Citizens analyst Andrew Boone maintained a Market Perform rating on Alphabet with no price target.

JPMorgan analyst Doug Anmuth reiterated an Overweight rating with a $195 price target.

Goldman Sachs analyst Eric Sheridan reiterated a Buy rating with a $200 price target.

Citizens on GOOGL: The I/O conference showed that artificial intelligence is improving every part of Google and the company's digital consumer experience, Boone said in a new investor note.

"I/O offers a glimpse into the future of AI-powered digital user experiences as AI advancements are driving more synthesization of information, agentic actions that are automating more of the consumer purchase journey," Boone said.

The analyst said new experiences like real-time translation and media creation could help Alphabet in its AI journey.

"We view AI as a tailwind for all forms of digital consumptions including media, commerce and services."

Boone said the concern is that competition for search is increasing and the U.S. search anti-trust trial is an overhang on Alphabet. The analyst said ChatGPT could be taking market share away.

"We believe commercial queries remain with Google, but the habituation of users to a different search experience should worry Google."

The analyst said Google is quickly rolling out its AI Mode, but its search business and revenue still face headwinds over the next few years.

"We believe shares are fairly valued at current levels."

JPMorgan on GOOGL: The Google I/O conference has Anmuth feeling "incrementally positive" about Alphabet.

"We believe Google is leading in many areas of AI with Gemini at the top of foundational model leaderboards," Anmuth said.

The analyst said Google's product innovation is "accelerating" and new products and experiences are being launched faster than ever.

"We believe Google's ‘total reimagining of search' is taking shape as AI Mode integrates what have been somewhat disparate AI products."

Anmuth said the road ahead is competitive, but Google shows confidence it can "navigate the shift to AI Search."

The analyst said AI Overviews, which were announced at I/O in 2024, have scaled to more than 1.5 billion monthly users and are driving improved satisfaction and engagement. Anmuth said AI Mode could have a similar impact on Google's search business.

"We believe Alphabet's fundamentals are solid and the company will remain both a driver of and primary beneficiary of an increasingly digital economy & advances in Generative AI."

Goldman Sachs on GOOGL: The company's I/O keynote showed acceleration in AI innovation, Sheridan said in a new investor note.

"Building off its AI progress over the past several years, Google's I/O Keynote showcased a number of new products, services and features across its suite of products," Sheridan said.

The analyst said the new AI progress in shown across many business lines and could point to the company's long-term vision of having Gemini AI capabilities into many user experiences across consumer and enterprise services.

Sheridan said Google's event and the launch of AI Mode comes with investors having more fear about the potential disruption of traditional search from the rise of AI.

"These innovations showcase how the company is well-positioned across a wide array of form factors & user interfaces that cover how AI-powered search may evolve over time."

The analyst said Alphabet is a leader in the AI and machine learning space.

"We came away from the keynote presentation increasingly constructive on Alphabet's long-term strategic positioning across many end-markets."

GOOGL Price Action: Alphabet stock is up 4.61% to $171.50 on Wednesday versus a 52-week trading range of $140.53 to $207.05. Alphabet stock is down 9.3% year-to-date and down around 3% over the last year.

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