Alphabet Hisseleri: Loop Capital's Price Increase Forecast!

Alphabet shares have regained confidence after being upgraded from Hold to Buy by Loop Capital. The firm indicates that investors' concerns regarding the search engine's transition related to artificial intelligence have largely dissipated.

Loop Capital Managing Director Rob Sanderson stated that all these concerns have "evaporated under waves of AI excitement," adding that the previous fears of the company are no longer shared by investors, and that worries about the sustainability of search revenue growth have been overcome.

The broker revised its target price for Google to $320, significantly raising it from the previous $260 target price. This increase implies that Google's core business commands a higher valuation multiple and offers a stronger outlook for Google Cloud.

Loop Capital stated, "We assign a 20x price-to-earnings multiple to Google’s core business,” noting that this multiple revision accounts for “about two-thirds of our target revision.” Sanderson emphasized that Google’s search business remains “healthier than ever” and that AI-focused innovations are bolstering this situation, particularly highlighting that the traffic share provided by Gemini has doubled year-over-year.

The firm noted the increasing value of Google Cloud's positioning and the expanding commercial opportunities for the company's custom AI chips, stating that “the scale of the opportunity for custom AI processors (TPUs) is better understood.” Loop Capital significantly raised its growth expectations for Google Cloud, maintaining a 25x adjusted EBITDA target multiple for this unit.

The company's renewed outlook reveals that the market has shifted from focusing on downside risks related to artificial intelligence to embracing Alphabet's upward potential with AI. While Loop Capital acknowledges that long-term questions surrounding search market dynamics persist, it emphasizes that these concerns continue to pale in comparison to the overall momentum of Alphabet's AI ecosystem.