Google parent Alphabet (GOOGL) posted third-quarter earnings that topped Street expectations and showed artificial intelligence (AI) progress, with both JPMorgan and Citigroup analysts noting the tech giant’s strong Google Cloud revenue.
JPMorgan raised its price target for Alphabet to $212 from $208 and reiterated an “overweight” rating.
The broker noted “Google’s increased confidence” in the rollout of its AI search business; its strong cloud business, with 35% year-over-year revenue growth in the quarter; and upside for operating profits given the company’s plans to “re-engineer the cost structure” as reasons behind the increased price target.
JPMorgan analysts said that Google’s AI Overviews service—its AI-generated search summaries—is being rolled out to 100 new countries and territories with a reach of more than a billion users per month, and is “monetizing at roughly the same rate as non-AI searches” in terms of advertising.
On the company’s earnings call, Alphabet Chief Executive Officer (CEO)Sundar Pichai said the …