Investors should not bail on Alphabet after a rough first quarter for Google's parent company, according to Wall Street analysts. Alphabet missed estimates on the top and bottom lines for the first quarter, sending its stock down in premarket trading. YouTube was a particularly weak area for the tech giant, with ad revenue from the video streaming arm coming in well below expectations. The company's chief financial officer warned of another potentially weak quarter ahead . Despite the misses, Wall Street analysts generally stuck to their optimistic ratings on Alphabet and in some cases recommended taking advantage of the decline in the stock. Shares were off 2.6% in premarket trading Wednesday. "We've been worried about a growth and margin reset hitting GOOGL shares, which remains the best-of-breed name in digital advertising, and we got a glimpse but likely not the full impact of that in 1Q," Barclays analyst Ross Sandler said in a note to clients reiterating his overweight rating. "Despite these concerns, GOOGL remains well positioned to weather the storm and we would look to add to positions selectively on weakness." There is growing concern about TikTok taking share of the advertising market from other social media sites and YouTube, but Wall Street analysts are not ringing alarm bells about Google's advertising business just yet. "Search, YouTube, and Cloud remain platinum franchises and the outlook remains broadly in-line," Piper Sandler's Thomas Champion said in a note. "Post-quarter, Google likely remains the best house in an increasingly complicated digital advertising neighborhood." Champion also reiterated his overweight rating. The tech giant's broad business model also means that search is just one piece of the puzzle, and there is strength elsewhere. "We expect more mixed trends in 2022 as search growth slows and hiring/opex increases," Bank of America's Justin Post said in a note. "However, vs peers, Alphabet has a more stable business, artificial intelligence (AI)/ machine learning (ML) advantages across the product stack (Performance Max a positive), significant expense flexibility, a [management] team doing more for shareholders under new CEO (ie buybacks) and potential valuation support." Post also called the company's margins a "big bright spot" in the quarter and reiterated his buy rating on the stock. Even with the analysts largely keeping their bullish ratings, there were several price target cuts for Alphabet. Here are some of the moves: Piper Sandler: to $2,900 from $3,475 Barclays: to $3,200 from $3,300 Wolfe Research: to $2,900 from $3,500 Bank of America: to $2,940 from $3,173 Wells Fargo: to $3,400 from $3,600 UBS: to $3,600 from $3,850 — CNBC's Michael Bloom contributed to this report.
Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.
FABRICE COFFRINI | AFP | Getty Images
Investors should not bail on Alphabet after a rough first quarter for Google's parent company, according to Wall Street analysts.