Price Target Increase#
Raymond James has increased its price target for Alphabet Inc. (NASDAQ:GOOG) from $400 to $425, while keeping a Strong Buy rating on the stock. Currently, Alphabet's shares are trading at approximately $347.31, close to its 52-week high of $353.40. Over the past year, the stock has shown a remarkable return of 117%.
Strong Performance in Search and Cloud#
The firm highlighted Alphabet's impressive performance in its search and cloud services. For the first time in four years, growth in these areas has accelerated above 20%, a trend that began following the digital shift during COVID-19. Search revenue grew by 19% year-over-year, surpassing the firm's estimate of 17-18%. Meanwhile, cloud revenue soared by 63%, exceeding the forecast of over 60% growth.
Financial Highlights#
In its latest financial report, Alphabet announced total revenue of $109.9 billion, marking a 22% increase. This includes $60.4 billion from Search and $20.0 billion from Cloud services. Google Services revenue rose by 16% to $89.6 billion, and YouTube ad revenue increased by 11% to $9.9 billion. Operating income also saw a significant rise of 30%, reaching $39.7 billion, which corresponds to a 36.1% operating margin.
Future Outlook#
Alphabet's cloud operating income has tripled to $6.6 billion, with an operating margin of 32.9%. The company has adjusted its capital expenditure outlook for 2026 to between $180-190 billion, with expectations for further increases in 2027. Despite these strong financial results, which included earnings per share of $5.11 compared to a forecast of $2.62, Alphabet's stock saw a slight decline in after-hours trading. RBC Capital also raised its price target for Alphabet to $425, citing strong cloud growth and a 19% increase in search revenue as key factors.