Alphabet's Stock Performance and Analyst Ratings Amid AI Competition

Analyst reboots Google parent's stock price target on DoJ case

If you google "recent Alphabet court victory," you probably won't get too many hits. That's because Google's parent, Alphabet (GOOGL) , has been facing serious court cases on both sides of the Atlantic. Related: Analysts reset Alphabet stock price target before key September court event On Sept. 10 the search, advertising and cloud-services giant lost its final legal challenge against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, Time reported. The European Union's Court of Justice upheld a lower court's decision, rejecting the company's appeal against the 2.4 billion euro -- $2.7 billion -- penalty from the European Commission, the 27-nation bloc's top antitrust enforcer. "By today's judgment, the Court of Justice dismisses the appeal and thus upholds the judgment of the General Court," the court said in a news release. The commission's original decision in 2017 accused the company of unfairly directing visitors to its own Google Shopping service to the detriment of competitors. It was one of three multibillion-euro fines that the commission imposed on Google in the previous decade as part of a crackdown on the tech industry. Alphabet did not immediately respond to a request for comment. Google lawyer: Federal case is a 'time capsule' The news from Europe comes just one day after Google's latest antitrust trial got under way. The Justice Department, joined by a coalition of states, and Google each made opening statements on Sept. 9 to a federal judge in Alexandria, Va., who will decide whether Google holds a monopoly over online advertising technology, the Associated Press reported. Related: Alphabet earnings up next with Google parent's AI costs in focus Prosecutors alleged that Google has largely dominated the technological infrastructure that funds the flow of news and information on websites through more than 150,000 online ad sales every second. Google said the government's case is based on an internet of yesteryear, when desktop computers ruled and internet users carefully typed precise World Wide Web addresses into URL fields. Advertisers now are more likely to turn to social media companies like TikTok or streaming-TV services like Peacock. In her opening statement, Google lawyer Karen Dunn likened the government's case to a "time capsule with a Blackberry, an iPod and a Blockbuster video card." Dunn said Supreme Court precedents warn judges about "the serious risk of error or unintended consequences" when dealing with rapidly emerging technology and considering whether antitrust law requires intervention. Sign up for TheStreet's free daily newsletter. Last month, Alphabet suffered a major defeat when a federal judge ruled that Google violated U.S. antitrust law with its search business. "After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," U.S. District Judge Amit Mehta wrote in his opinion. The contracts have given the company the scale to block out would-be rivals such as Microsoft's (MSFT) Bing and DuckDuckGo, the U.S. government alleged, CNN reported. Kent Walker, Google's president of global affairs, said the company intended to appeal Mehta's findings. "This decision recognizes that Google offers the best search engine, but concludes that we shouldn't be allowed to make it easily available," he said. Analyst says time is on Google's side Alphabet is also being sued by longtime rival Yelp (YELP) , which accuses Google of using its dominance to control the local search market. "Google abuses its monopoly power in general search to keep users within Google's owned ecosystem and prevents them from going to rival sites," Yelp CEO Jeremy Stoppelman wrote in a blogpost. As for Alphabet's stock, the shares are up 7.2% year-to-date and 10.2% from a year ago. More Tech Stocks: In July, the company posted a solid second-quarter earnings report. Revenue was $84.74 billion, up 14% from a year earlier and topping the $84.19 billion expected by analysts. Earnings of $1.89 a share were also higher than the $1.84 forecast. The revenue growth was driven by the company's search and cloud segments, which were up 14% and 29% year over year, respectively. Piper Sandler analyst Thomas Champion lowered the investment firm's price target on Alphabet to $200 from $206 and affirmed an overweight rating on the shares after speaking with an antitrust lawyer to discuss the company's Department of Justice litigation, according to The Fly. In his view, the government has successfully argued the merits within two of three cases, but time is on Google's side. The Search trial, which is most significant, has a lengthy process of remedies and appeals ahead. Meanwhile, there could be a new administration in the interim and technology is advancing fast. The firm's expert characterized the judge's ruling as "measured," implying a breakup is unlikely, Champion said. Piper noted the near-term headline risk, but its valuation work suggests this is priced in and net to a view that the Search case and others amount to a distraction. Long-term investors should use recent weakness to accumulate shares, in the investment firm's view. D.A. Davidson initiated coverage of Alphabet with a neutral rating and $170 price target. As the company faces challenges in its core Search business, its opportunity will migrate to the rest of its portfolio, where its positioning is mixed, the firm said. Davidson said that it expected Alphabet to continue trading at a discount to other megacap stocks "unless it becomes more aggressive in pursuing those opportunities." Alphabet is at a crossroads, where it will either be "Xeroxed" or emerge as a leader in the most important new categories of computing, D.A. Davidson said. Related: Veteran fund manager sees world of pain coming for stocks

Piper Sandler cuts Alphabet shares target, keeps Overweight rating By Investing.com

Piper Sandler has adjusted its price target for Alphabet Inc. (NASDAQ: NASDAQ:GOOGL), the parent company of Google, to $200 from the previous $206 while maintaining an Overweight rating on the stock. The revision follows a conversation with an Antitrust lawyer regarding Alphabet's ongoing litigation with the Department of Justice (DOJ). According to the lawyer's assessment, the government has presented a strong case in two out of three lawsuits against the tech giant. The most critical case, concerning Google's Search operations, is expected to undergo a protracted process involving remedies and appeals. The analyst noted that while this trial proceeds, there could be changes in the administration and rapid technological advancements that may influence the outcome. The legal expert described the judge's initial ruling as "measured," suggesting that a company breakup is unlikely. Piper Sandler acknowledges that Alphabet is facing near-term risks due to the legal headlines, but their valuation analysis indicates that these concerns are already reflected in the current stock price. Alphabet Inc's Google has been unsuccessful in its attempt to overturn a $2.7 billion fine imposed by the European Union's antitrust regulators. This fine is part of a series of penalties Google has faced in Europe, with the company accumulating €8.25 billion in EU antitrust fines over the past decade. Google is currently awaiting judgments for two other appeals related to rulings involving its Android mobile operating system and its AdSense advertising service. In other recent developments, the U.S. Department of Justice is set to propose remedies in the ongoing antitrust case against Google's search operations by December. This case, part of a broader scrutiny by U.S. regulators into the business practices of major tech companies, could have implications for Google's operations and potentially for the wider technology sector. Apple (NASDAQ:AAPL) is shifting its focus to artificial intelligence (AI) with the launch of its iPhone 16. The new phone showcases AI capabilities, diverging from Apple's traditional focus on hardware enhancements. This comes after the company introduced Apple Intelligence, a generative AI platform, and an improved Siri with ChatGPT integration. Piper Sandler's recent reassessment of Alphabet Inc. (NASDAQ:GOOGL) aligns with several InvestingPro Tips that highlight the company's strong financial position. Alphabet holds more cash than debt, a significant indicator of financial health, especially in the face of ongoing litigation. Additionally, the company's oversold status, as suggested by the RSI, and its low P/E ratio relative to near-term earnings growth, suggest that the stock may be undervalued at its current price. InvestingPro Data further underscores Alphabet's robust financials with a market capitalization of $1.84 trillion USD and a P/E ratio of 21.16, which adjusts to 20.24 when looking at the last twelve months as of Q2 2024. The PEG ratio for the same period stands at an attractive 0.44, indicating potential for growth relative to its earnings. Furthermore, the company's revenue growth remains strong at 13.38% for the last twelve months as of Q2 2024. For investors considering Alphabet's long-term potential, these metrics may provide additional confidence. The company's profitability over the last twelve months and a history of high returns over the last decade are positive signs for those looking to accumulate shares amidst current market conditions. For more detailed analysis and additional InvestingPro Tips on Alphabet Inc., investors can visit https://www.investing.com/pro/GOOGL, where 11 further tips are available to help make informed investment decisions.

Alphabet neutral rating initiated by DA Davidson, stock target set By Investing.com

On Tuesday, DA Davidson began its coverage of Alphabet Inc. (NASDAQ: NASDAQ:GOOGL) shares with a neutral stance, setting a price target for the tech giant's shares at $170. The firm outlined its perspective on Alphabet's current position in the technology sector, noting potential challenges and opportunities ahead for the company. Alphabet, known for its dominance in the online search market through Google, is at a significant juncture, according to DA Davidson. The firm anticipates that Alphabet's growth opportunities will shift from its core Search business to other areas within its portfolio, which it views as having mixed prospects. The company's future trajectory is seen as dependent on how aggressively it pursues these new opportunities. The analyst's commentary pointed to Alphabet's need to trade more assertively to avoid continuing at a discount compared to other mega-cap companies. The firm's neutral rating reflects a cautious outlook on Alphabet's ability to adapt and lead in the evolving landscape of Compute, which includes burgeoning areas like artificial intelligence (AI). DA Davidson's concerns are rooted in Alphabet's response to recent advancements in AI. The firm highlighted that Google appeared to be taken by surprise by the development of ChatGPT and Microsoft (NASDAQ:MSFT)'s rapid commercialization of AI services. This situation draws a parallel to Xerox (NASDAQ:XRX)'s history in the 1980s when it failed to capitalize on its own technological innovations, leading to other companies like Microsoft and Apple (NASDAQ:AAPL) taking the lead in commercializing personal computing technology. The price target of $170 by DA Davidson represents the firm's expectations for Alphabet's stock performance in the near term, given the identified challenges and the critical decisions that lie ahead for the company. The neutral rating suggests a wait-and-see approach, as Alphabet's strategies unfold in the competitive tech market. As Alphabet Inc. navigates a pivotal moment in its growth, real-time data from InvestingPro offers additional context for investors considering DA Davidson's neutral stance. The company's market capitalization stands impressively at $1.84 trillion, underlining its massive presence in the tech sector. Despite recent market fluctuations, Alphabet's P/E ratio of 20.24 suggests a reasonable valuation relative to its near-term earnings growth, supporting the view that the stock might be undervalued. With a gross profit margin of 57.64% over the last twelve months as of Q2 2024, Alphabet demonstrates strong profitability in its operations. Moreover, the company's revenue growth of 13.38% during the same period indicates a consistent ability to expand its financial top line. An InvestingPro Tip highlights that Alphabet holds more cash than debt on its balance sheet, providing financial flexibility to invest in growth opportunities, particularly as it faces the challenge of adapting to the AI revolution. Investors seeking a deeper dive into Alphabet's performance and potential can find further insights on InvestingPro, including 11 additional InvestingPro Tips that provide a comprehensive analysis of the company's financial health and market position. For detailed tips and metrics, visit https://www.investing.com/pro/GOOG.