Alphabet (GOOGL) stock has seen gains of over 11% in the past month, putting it amongst the best of the Magnificent-7 stocks in that span. The Google developer posted solid earnings in its latest quarterly report, highlighted by $96.4B in revenue, beating Wall Street expectations. Despite growing competition in AI amongst top companies, Alphabet remains in the running for the most successful Mag-7 stock member in that sector.
The company’s outlook for capital expenditures (capex), however, was higher than expected. The tech giant expects to spend $85bn in the year, $10bn more than had been previously expected. Ben Barringer, head of technology research at Quilter Cheviot, says: “Given the concerns around disruption from artificial intelligence and ChatGPT, Alphabet produced a really good set of numbers in its latest results. Revenues were up 15%, three percentage points better than expected, and the search business delivered at the top of its range. The cloud business, meanwhile, was also a strong performer with revenues up 32% so it is encouraging to see the business growing strongly in the face of pressures.”
Could AI Drive Alphabet (GOOGL) Higher?
In addition, worries bout a rise in capital expenditures amongst big tech into AI appear to be dying down. Alphabet said capital expenditures will climb to $85 billion, higher than the previous $75 billion forecast. The investments in AI have proven fruitful, helping Alphabet (GOOGL) stock rise 6% YTD.
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Furthermore, Alphabet (GOOGL) is still facing worries of consequences in its antitrust lawsuit for Google Search. The DOJ won the legal battle, and a ruling is expected to come in the next month. Many analysts were concerned that a punishment for Alphabet could run so high that the company could be forced to sell its Chrome web browser, which is a huge factor in the company’s profits.
Analysts are generally optimistic about Alphabet’s growth potential. Price targets range from $191 to $240, indicating potential upside from the current price of $201.42. Wedbush and Tigress Financial are optimistic with targets of $225 and $240, respectively, while Rosenblatt is more conservative with a $191 target. Roth MKM boasts the highest price target accuracy historically, suggesting confidence in their $220 target.