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Wall Street is buzzing over Alphabet’s blowout June quarter financial results.
Analysts are growing more confident over the prospects for many of Alphabet’s emerging businesses, including YouTube, autonomous cars and cloud computing.
The internet giant reported better-than-expected second-quarter earnings Monday. It posted adjusted earnings per share of $11.75 versus the Wall Street consensus of $9.59 for the quarter.
Alphabet shares closed up 3.9 percent Tuesday, after hitting a new all-time high earlier in the day.
J.P. Morgan reiterated its overweight rating for Alphabet shares, citing the firm’s optimism over the company’s artificial intelligence prowess.
“Alphabet delivered strong top line results, again proving that its increased investments are paying off,” J.P. Morgan analyst Doug Anmuth said in a note to clients Tuesday. “Investments in machine learning & AI are driving innovation throughout Alphabet’s businesses, including mobile search, cloud, Google Home, Assistant, Waymo, etc.”
Anmuth raised his price target to $1,440 from $1,285 for Alphabet shares, representing 19 percent upside to Monday’s close. He predicts the company’s new offerings will drive a consistent sales growth rate of more than 20 percent.
“We continue to believe there is meaningful runway across search and YouTube as ROI improves and TV dollars shift more online. Google Segment’s other businesses such as Cloud, Play, and Hardware have strong momentum,” he added.
In similar fashion, KeyBanc Capital Markets reiterated its overweight rating for the stock, predicting Alphabet’s investments will also generate strong returns.
“We continue to recommend owning GOOGL. Alphabet continues to invest heavily in front of large growth opportunities, while its core ad business continues to churn out impressive growth,” analyst Andy Hargreaves said in a note to clients Monday. “We believe strong growth potential remains in opportunities with cloud, hardware, YouTube, Waymo, and Other Bets, which should add significant value over time.”
Hargreaves raised his price target to $1,430 from $1,230 for Alphabet shares.
One Wall Street analyst is especially excited over the potential of the company’s self-driving division Waymo.
“We see Waymo commercialization later this year as an additional positive catalyst given the company’s technology leadership in a market with enormous TAM(s) [total addressable market] and potential for increased disclosure / separate capitalization over time,” Deutsche Bank analyst Lloyd Walmsley said in a note to clients Monday. “We would add to positions as we see the stock as under-owned and now supported by a compelling medium narrative on top of a durable high-quality name with meaningful value not currently reflected in the shares, in our view.”
Walmsley reaffirmed his buy rating and reiterated his $1,350 price target for Alphabet shares.
Alphabet shares are outperforming the market so far this year. Its shares are up 15 percent year to date through Monday versus the S&P 500’s 5 percent gain.