Analysts Weigh in on Google Parent Alphabet's Shares After Cloud Computing Debacle

Gogol tried to count the clouds from both sides of the noodle, hoping to get a share of the pie.

The company, which is part of Alphabet (GOOG) The search engine giant wants to make the cloud more affordable and profitable at the same time.

Google is looking to move into the territory of tech rivals Microsoft and Amazon. The three companies also have the potential to take on artificial intelligence chip king Nvidia.

On April 9, Alphabet unveiled an Arm Holdings-designed CPU chip at the Google Cloud Next 2024 conference in Las Vegas.

The Axion chip is also designed to handle AI processes better than traditional central processors such as Intel's x86 chips. Together with a Tensor processing unit made by Google with the help of Broadcom, the chip can be used by Google Cloud customers to help them create AI applications.

"Our first Arm-based custom CPU for data centers offers up to 50% of performance improvement over previous x86-based examples, and up to 60% of performance improvement over previous x86-based examples," said Thomas Kurian, Google Cloud's chief executive officer, according to the Economic Times. up to 60%.

The new custom silicon processor, which will be available to customers later in 2024, already powers YouTube ads, Google Earth Engine and other Google services.

Analysts 'encouraged by Google's progress'

"Google Cloud is the only major cloud provider to offer both first-party AI models and third-party AI models, which is an incredible differentiator when it comes to our name partners and customers," said Kurian in his keynote address.

Analysts reacted enthusiastically to Google's announcement at the cloud conference.

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Wedbush analysts have an "outperform" rating on Alphabet's stock and a $175 price target.

The company says Google's most advanced model - the Gemini 1.5 Pro - offers a much larger contextual window than its main competitors.

Wedbush said it is encouraged to see Gemini 1.5 Pro powering enterprise tools such as Gemini Code Assist, as well as broader use cases in the Gemini family of models that should drive direct monetization.

"We continue to emphasize Alphabet's competitive positioning advantages in the broader context of its unparalleled breadth of data available for developing and training AI models, AI-optimized computing infrastructure powered by custom chips, access to leading engineering talent, and Compact integration with its name partners at all levels of the generative AI stack.

Wedbush said the company's progress includes developing its AI capabilities, announcing the commercialization of early-stage enterprise solutions through Axion, and a long list of generative AI services and capabilities within the Google Cloud that should support multi-year growth.

Analysts Raise Alphabet's Target Stock Price

The analyst said that since Google's Cloud Next event in August of last year, Google has announced hundreds of new郃 partnerships, and about 90% AI unicorns are now Google Cloud customers, up from 70% in August. (Unicorns are valued at at least $1 billion).

BMO Capital analyst Brian Pitz raised his firm's price target on Alphabet shares to $185 from $178, while affirming an "outperform" rating on the company's stock following an investor meeting.

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The analyst said that search and shopping ads in Google's SGE (Search Generative Experience) will bring lasting revenue growth for the company's AI products in the coming quarters, as the most useful information will be provided to users.

BMO added that Google Search's market share in the U.S. rose 0.2 percentage points from December 2023 to February 2024, compared to November 2023 to January 2024, to 93.71 TP3T. its global market share of 801 TP3T "remained stable."

Analysts at Bank of America Securities said their biggest takeaways from the event were Google's hardware advancements, Gemini progress, and AI micro-applications � these should help the perception of AI capabilities, and the ability to leverage Google search/data to ground the models is an attractive capability."

B of A analysts say the cloud AI cycle may be undervalued by the industry and could be a positive driver for Google stock. The investment firm confirmed a buy rating and $173 price target on Google's stock.

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