TD Cowen has expressed continued confidence in Alphabet (NASDAQ:GOOGL) Inc. (NASDAQ: GOOG), maintaining a Buy rating and a $220.00 price target.
The firm's assessment follows a third-quarter digital advertising expert check, which indicated that Google's Search ad spending growth remained robust in the third quarter of 2024, albeit with a slight sequential deceleration. This trend suggests a healthy digital advertising environment overall.
The analysis by TD Cowen also highlighted that, according to their survey data, YouTube is continuing to capture a larger share of the younger demographic's viewership. This is significant as it points towards a sustained competitive edge for Alphabet's video platform in a key market segment.
For the third quarter of 2024, TD Cowen forecasts Alphabet's gross revenue to increase by 13.0% year-over-year, which is slightly above consensus estimates by 0.4%. Additionally, the firm's projections for Alphabet's operating income and earnings per share are 2.4% and 1.3% higher than consensus estimates, respectively.
The analyst's statement emphasized the positive outlook: "Our 3Q Digital ad expert check call on 10/7 suggests GOOG Search spend growth remained solid in 3Q24 (with slight seq decel), suggesting a healthy Digital ad environment. Our survey data implies YouTube is still gaining share among younger viewers. Our 3Q gross rev (+13.0% y/y) is +0.4% vs cons, while our Op Inc / EPS est's are +2.4% / +1.3% vs cons, respectively. Maintain Buy & $220 Price Target."
In other recent news, Alphabet Inc. has been the focus of several recent developments. Truist Securities increased Alphabet's stock target to $220, maintaining a positive outlook for the company's third quarter of 2024. The firm's optimism is based on strong user interaction with Alphabet's Search and YouTube platforms and steady performance in the Cloud sector.
Goldman Sachs, however, reduced Alphabet's stock target from $217.00 to $208.00, while retaining a Buy rating. This adjustment considered the potential financial impacts of ongoing U.S. Department of Justice (DOJ) antitrust lawsuits and the evolving landscape of search technology influenced by advancements in artificial intelligence (AI).
In the realm of AI, Alphabet's dominance was underscored by recent Nobel prizes awarded to its experts. Demis Hassabis, co-founder of Google's AI unit DeepMind, and colleague John Jumper were honored for their work on protein structures, while former Google researcher Geoffrey Hinton received a Nobel prize for contributions to machine learning.
Alphabet's Google has also inked a deal with Kairos Power to secure electricity from small modular reactors (SMRs) for the first time. The inaugural SMR is expected to be online by 2030, marking a trend of tech companies turning to nuclear power to meet their growing energy needs.
On the legal front, Google has been ordered to allow Android users to access and download competing app platforms and use alternative in-app payment systems. The DOJ has proposed potential remedies aimed at dismantling Google's search dominance, suggesting the divestiture of certain business segments, such as its Chrome browser and Android operating system.
InvestingPro Insights
To complement TD Cowen's optimistic outlook on Alphabet Inc. (NASDAQ:GOOG), recent data from InvestingPro provides additional context to the company's financial performance and market position.
Alphabet's revenue growth remains strong, with a 13.38% increase over the last twelve months as of Q2 2024, aligning closely with TD Cowen's forecast of 13.0% year-over-year growth for Q3. This robust growth is reflected in the company's impressive market capitalization of $2.05 trillion.
InvestingPro Tips highlight Alphabet's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "cash flows can sufficiently cover interest payments." These factors contribute to Alphabet's stability and ability to invest in growth areas like YouTube, which TD Cowen reports is gaining share among younger viewers.
The company's profitability is also noteworthy, with an adjusted operating income of $101.87 billion over the last twelve months and an operating income margin of 31.03%. This strong performance supports TD Cowen's higher-than-consensus estimates for operating income and earnings per share.
Investors considering Alphabet might be interested to know that InvestingPro offers 11 additional tips for this stock, providing a more comprehensive analysis of its investment potential.
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