Analyst update Alphabet stock price target after AI event

Google is making moves to enhance its AI presence.

At the new Gemini at Work event, the company highlighted a 35-fold expand within the usage of its Gemini platform, a generative man made intelligence chatbot. The event featured 185 AI integration examples across a spread of of enterprises, from healthcare providers to car makers to retailers.

As an instance, Volkswagen (VWAGY) of The us has integrated Google Cloud's AI into its myVW mobile app, where drivers can explore their owners’ manuals and ask questions like “methods to change a flat tire.”

Snap (SNAP) has collaborated with Google Cloud, too. The social media giant is the use of Google's AI technology to toughen its My AI chatbot on Snapchat. This partnership allows Snap to present more interactive features, utilizing Gemini's ability to process text, audio, images, and video.

Warner Bros. (WBD) have also deployed an AI-powered captioning solution the use of Google Cloud's Vertex AI platform, which reduces the time and value of captioning while bettering accuracy for unscripted programming.

Generative AI is driving growth within the cloud computing market, where Google ranks 1/3 behind Amazon and Microsoft. Global enterprise spending on cloud infrastructure services and products in Q2 hit $seventy nine billion, up 22% year-over-year, in keeping with Synergy Research Group.

Amazon now leads the market with a 32% share, while Google, with 12%, is gaining momentum alongside Microsoft as of Q2 2024.

Related: Analysts rethink Amazon stock price targets after earnings

Google's most up-to-date earnings: strong performance amidst AI growth

Alphabet (GOOGL) , Google's parent company, recently reported strong growth in its cloud segment, reflecting strong AI demand.

The corporate’s most up-to-date Q2 financial report in July showed earnings per share of $1.89, a little bit above the $1.84 forecast. Revenue hit $84.seventy four billion, up 14% year-over-year, surpassing analyst expectations of $84.19 billion.

Google's advertising segment, which incorporates Google search and Youtube ads, continues to account for the largest section of total revenue. The segment generated $sixty four.6 billion for the quarter, accounting for seventy six% of total revenue and reflecting an eleven% year-over-year growth.

Related: Analysts reset Alphabet stock price target sooner than key September court event

The cloud segment, though representing handiest 12.2% of total revenue, experienced significant growth, with revenue rising 28% year-over-year to $10 billion. The surge reflects the growing adoption of AI across enterprises and consumers.

Alphabet highlighted its accelerated efforts in AI in July’s earnings free up, with advancements being developed across Google Research and Google DeepMind. “We're innovating at every layer of the AI stack,” said CEO Sundar Pichai.

On the alternative hand, the U.S. Justice Department is concerned that Google's strong position in search may maybe lead to an unfair advantage in AI development. It truly is miles running an antitrust trial against Google, which started in early September.

The DOJ is allowing for restrictions on Google’s use of web pages online content for AI products, along with as spinning out its Chrome browser or Android operating system, in keeping with a Bloomberg report.

Analysts have mixed views on Alphabet's future

Analysts have recently spoke back to Google's AI advancements with mixed reactions.

Tigress Financial on Sept. 26 raised Alphabet's price target to $220 from $210 and keeps a sturdy buy rating, citing ongoing strength in Google’s search and cloud segments, in keeping with thefly.com.

The analyst expects Gemini generative AI to maintain fueling revenue and cash flow growth and highlights that the raised price target indicates a it may possibly be easy to get back, including dividends, of over 36% from current levels.

JMP Securities analyst Andrew Boone reaffirmed positive views following the Gemini event, affirming an outperform rating and a $200 price target on Alphabet shares.

Oppenheimer, nevertheless, has lowered its price target for Alphabet from $210 to $185 with an outperform rating.

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The firm notes that while the impact of Google Search being labeled a monopoly is uncertain, investors are factoring within the aptitude loss of exclusivity with Apple (AAPL) , likely limiting Alphabet's price-to-earnings ratio to twenty times.

Currently, Google earns 31% of its gross search revenue from Apple devices and pays 36% to Apple for this exclusivity, which results in 19% net ad exposure, the analyst says.

Alphabet stock is up 17.eight% year-to-date as of Sept. 26, while the S&P 500 Index is up greater than 21% within the identical period.

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