Alphabet (GOOGL) Execution Across AI, Ads, and Cloud Lifts Bernstein Outlook

Alphabet Inc. (NASDAQ:GOOGL) is one of the 10 Buzzing AI Stocks on Market Radar. On February 3, Bernstein SocGen Group analyst Mark Shmulik raised the price target on the stock to $335 (from $305) while maintaining a Market Perform rating. The firm recognizes strength across verticals for Alphabet, but also notes competitive pressures limiting upside.

The firm believes that Google has turned into a safe harbor for investors, appealing to those worried of an AI bubble. These are those that are bullish on the AI sector but are cautious about OpenAI.

Bernstein noted strong execution for Alphabet across all verticals, including AI, search, Cloud, and YouTube. The firm also highlighted management’s assurance that AI products are expanding search opportunities for the company without diluting monetization.

Moreover, advertising checks and engagement point to a robust Q4 setup, supported by positive signals from Meta’s earnings as well as foreign exchange tailwinds.

Analysts further noted how competitive threats coming from the likes of TikTok and ChatGPT are more prominent on smaller platforms than core search. However, valuation has grown stretched as investors’ crowd into the stock. Another reason is that competition across AI and search such as OpenAI, Meta, Anthropic, Amazon, and the Chinese players imply that Google’s dominance may face renewed challenges.

We remain Market-Perform, PT $335/share (+$30). We value Alphabet using a 50/50 combination of 2027e EV/EBIT multiple of 24x (+1x) and a DCF using a WACC of 10% and a terminal growth of 3.5%. We take up Google Cloud estimates and slightly tweak OpEx and DCF assumptions. We allocate higher multiple to reflect Google’s solid execution across verticals. We consider Alphabet primarily a digital advertising business and benchmark valuation to comparable peers in this industry set.

Alphabet Inc. (NASDAQ:GOOGL) is an American multinational technology conglomerate holding company wholly owning the internet giant Google, amongst other businesses.

While we acknowledge the potential of GOOGL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.