Alphabet (GOOG, GOOGL) is expected to have an 'attractive' Q4 setup, driven by strong advertising trends similar to those seen at Meta Platforms (META), Oppenheimer said in a note emailed Thursday.
The investment firm raised its price target on Alphabet, citing AI-driven ad price growth and resilient search engagement as key factors supporting the stock.
Investor expectations for Google remain relatively low compared to other mega-cap internet firms, partly due to limited third-party data, the firm noted.
Despite a strong holiday season and an improving 2025 economic outlook, many believe revenue growth could fall below the Street's 10% forecast, though margins are expected to remain strong.
Concerns persist that younger users are shifting to AI chatbots, but there is no clear indication this trend will impact Google in the near term. The company appears to be in a better AI position than many had anticipated 12 to 18 months ago, Oppenheimer said.
Meanwhile, advances from DeepSeek's open-source model could help Google improve efficiency, potentially neutralizing any short-term competitive edge held by DeepSeek or OpenAI.
Search, YouTube and Google Cloud are expected to witness year-over-year growth of 12%, 10% and +32% respectively, while Services and total operating income are projected to rise by 28% and 34%, according to the note.
A GAAP EPS of $2.22 is anticipated for the company, higher than the Street's estimate of $2.12, suggesting the investors are more optimistic about earnings, the note added.
Oppenheimer has a outperform rating for Alphabet and raised its price target to $225 from $215.
Price: 201.44, Change: +4.26, Percent Change: +2.16
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