Google Parent Alphabet Reported Strong Revenue Growth and AI Breakthroughs, But Capex Raises Questions: Analysts React
Portfolio Pulse from Anusuya Lahiri
Alphabet Inc (NASDAQ:GOOGL) reported Q4 revenue growth of 13% to $86.31 billion, surpassing estimates. EPS at $1.64 also beat expectations. KeyBanc and Needham analysts maintained positive ratings with price targets of $165 and $160, respectively, citing strong Cloud growth and AI breakthroughs. However, higher-than-expected capex raised concerns, potentially tempering short-term enthusiasm. William Blair maintained an Outperform rating despite noting higher capex and disappointing ad growth. GOOGL shares fell 6.20% following the report. The average 1-year price target for Alphabet is $163.83, with bullish sentiment prevailing among analysts.
January 31, 2024 | 7:01 pm
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NEUTRAL IMPACT
Alphabet's increased capex has drawn comparisons to Meta Platforms' metaverse investments, potentially affecting investor sentiment towards both companies.
While META is not the primary focus of the article, the comparison of Alphabet's capex to Meta's metaverse investments could influence investor sentiment for both companies. The direct impact on META's stock is less clear and likely neutral in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
NEGATIVE IMPACT
Alphabet Inc reported higher-than-expected Q4 revenue and EPS, with strong Cloud segment performance and AI advancements. However, shares dropped due to concerns over increased capex.
The short-term negative impact on GOOGL's stock price is likely due to investor concerns over the higher capex, which may affect profitability. Despite the positive earnings report, the immediate market reaction was negative, reflecting these concerns.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100