Two firms covering Alphabet stock raised price targets on the parent of Google and YouTube.
Stifel analyst Mark Kelley boosted his price target on $Alphabet-C (GOOG.US)$ $Alphabet-A (GOOGL.US)$ to $225 from $200 while maintaining a Buy rating. The new price target indicates a potential upside of 17% from the stock’s previous close on Friday.
Meanwhile, Wells Fargo analysts led by Ken Gawrelski increased their price target on shares to $190 from $187, and reiterated an Equal Weight rating. Wells Fargo’s new target indicates 1% downside from Friday’s close.
Kelley wrote that Alphabet is “a dominant leader in search and ad-supported online video.” He added the company has a “long-term growth opportunity” fueled by artificial intelligence and digital advertising.
In addition to Google Gemini, the company’s flagship chatbot and AI assistant, Alphabet offers a fleet of tools for businesses including AI-powered ad solutions.
Despite the abundance of AI tools on the market, Kelley believes Alphabet is in a lane of its own. “We view the competitive threat narrative as largely overdone,” Kelley wrote.
While Wells Fargo predicts a “steady near term,” Gawrelski’s team recognize the downside to Alphabet’s AI push. A key question remains in how aggressive Alphabet will be in promoting Google Gemini “at the risk of cannibalizing search,” the analysts wrote.
Last year, Google unveiled a new Gemini model customized for Google Search. The model powers “AI Overviews,” or generative AI summaries that appear at the top of Google Search results.
Wells Fargo expects AI agents “to gradually displace search as the key internet navigation interface,” with Alphabet’s traditional search revenue to start showing negative growth by fiscal 2028.
“Even if Google maintains search leadership, we do not expect the company to replicate its prior prosperity in the next decade,” the analysts wrote.
Although Google has been enveloped in various legal woes, Wells Fargo sees a “quieter quarter” for a case involving Google Search, which should favor shares of its parent company.
The D.C. District Court found in August that Google had violated antitrust law by entering exclusive distribution agreements that made its search engine the default option in certain browsers.
One proposed remedy would force Google to divest Chrome. A judge is expected to issue a decision in that case by August 2025.
While Google could receive a verdict in a separate ad tech antitrust case in the first quarter of 2025, Wells Fargo sees this “as less consequential to the stock.”
Alphabet shares were down 1.3% on Monday, following a broader slide of tech stocks.