On Friday, Truist Securities expressed continued confidence in Alphabet Inc. (NASDAQ:GOOGL), maintaining a Buy rating and a $225.00 price target on the stock. With a market capitalization of $2.43 trillion and trading near its 52-week high, Alphabet has demonstrated strong momentum. According to InvestingPro data, the company maintains excellent financial health with a comprehensive score of "GREAT." The firm anticipates that Alphabet's fourth-quarter 2024 results, which are set to be released on February 4, will align with the current consensus, driven by robust engagement in Search and YouTube (YT), as well as steady growth in its Cloud business.
The analyst from Truist Securities highlighted that Alphabet's revenue is expected to rise by low double-digits, building on its impressive 14.38% revenue growth over the last twelve months. The company's sustained performance in its Cloud segment is also contributing to the positive outlook, with strong return on equity of 32%. Additionally, Alphabet is projected to report operating margins exceeding 30%, as operational expenditure (Opex) containment is likely to offset higher capital expenditures (Capex).
The commentary from the firm points to sustained momentum from the third quarter into the fourth quarter across Search and YT. This momentum is believed to be driven by growth in key sectors such as Health, Consumer Packaged Goods (CPG), Retail, and Political advertising. Despite recent concerns surrounding the evolution of artificial intelligence (AI) in Search and regulatory pressures, Truist Securities believes that Google remains well-positioned to lead in the AI space within Search.
Truist's outlook for Alphabet comes at a time when AI is increasingly in focus for the tech giant. The analyst's statement underscores the belief that while AI presents challenges, it remains an area where Google has the potential to dominate. The firm's reiteration of its Buy rating and price target suggests that they see Alphabet's stock as a favorable investment ahead of the upcoming earnings report.
In other recent news, Google has pledged to make significant changes to its approach in handling fraudulent reviews, as announced by the UK's Competition and Markets Authority (CMA). The tech giant will implement sanctions to discourage businesses from profiting from deceitful reviews, including penalizing those who produce such reviews.
Simultaneously, Apple Inc (NASDAQ:AAPL). and Alphabet Inc., the parent company of Google, face investigations by the CMA over their dominance in mobile services. The probe aims to ascertain if their control over mobile operating systems, app stores, and web browsers creates unfair barriers for competitors.
In partnership news, Samsung Electronics Co (F:SAMEq). is collaborating with Google to develop augmented reality glasses, marking their entry into this rapidly expanding product category.
Moreover, Google's CEO Sundar Pichai aims to expand the user base of the company's Gemini AI chatbot to 500 million by the end of 2025.
Lastly, Alphabet is under investigation by the CMA over the potential impact of its search services on competition. This investigation is the first under the UK's new digital-markets regime. All these developments represent recent changes affecting the operations and market position of Alphabet and Google.
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