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3 weeks ago
Google Accelerates AI Innovation: JPMorgan Bullish On Alphabet As Apple-Microsoft Rivalry Intensifies
By: Benzinga | June 6, 2024
Alphabet Inc. GOOG GOOGL is on the offensive, rapidly advancing its AI capabilities despite market noise and competitive pressures.
Following impressive showcases at Google I/O and Google Marketing Live (GML), the company is pushing boundaries in generative AI, aiming to reshape search and advertising.
The Google Analyst
JPMorgan analyst Doug Anmuth reiterates an Overweight rating on Alphabet, with a price target of $200 by December 2024. Anmuth highlights Google’s aggressive pace in AI innovation, which he believes will overshadow short-term setbacks.
“The company is on the offensive in Gen AI, w/a faster pace of innovation as AI Overviews in Search expand to general users & advertisers,” Anmuth said.
The Google Thesis
Market Position and AI Innovation
Anmuth notes that Google's AI Overviews in Search are now expanding to general users and advertisers. This is driving higher satisfaction and more complex queries.
Early inaccuracies are being addressed with technical improvements, ensuring that Google’s AI remains a powerful tool for enhancing search results and driving quality traffic.
AI Partnerships and Competitive Landscape
“In terms of WWDC, the growing likelihood of an Apple Inc AAPL –OpenAI partnership around GenAI is a concern for investors,” Anmuth said. This could potentially position OpenAI (and Microsoft Corp MSFT ahead in the AI race.
However, Anmuth suggests Apple might still consider partnering with Google for its Gemini project, given their established relationship.
Google I/O & GML – Key Highlights
The following are some key announcements that impressed JPMorgan the most, from the “100+ announcements” at the I/O and GML events:
• Gemini Integration: AI Overviews in Search to reach over 1 billion users by year-end, with enhancements like Project Astra and Gemini Advanced promising significant improvements.
• Multimodal Interactions: Expansion of Gemini's capabilities, including the lightweight Gemini Nano, making AI more versatile and efficient.
• LLM Advancements: Introduction of new models like Gemini 1.5 Flash, Veo (video generation), and Imagen 3 (image generation), highlighting a diverse AI strategy.
• Google Cloud TPU: The new Trillium TPU showcases a leap in performance and energy efficiency, reducing latency and costs for AI products.
Monetization AI Advancements
Google's testing of Search and Shopping ads in AI Overviews marks a strategic move to monetize AI advancements.
The appointment of Anat Ashkenazi as CFO, succeeding Ruth Porat, brings a fresh perspective and strategic focus to Alphabet's financial leadership.
Despite competitive pressures and early AI rollout challenges, Anmuth expresses confidence in Google’s strategic direction and accelerated innovation.
The reiterated Overweight rating and $200 price target reflect a bullish outlook on Google's diversified AI monetization path through Search, Cloud, and other 2B+ user products.
As Google refines its AI capabilities and expands its market presence, the future looks promising for the tech giant and its stakeholders.
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DiscoverGold
1 month ago
Google Set to Make Its Largest Acquisition Ever, Threatening Microsoft
By: Quartz | May 24, 2024
• Google's purchase of HubSpot is in line with its goal to 'take market share from Microsoft,' according to one analyst
Google parent Alphabet is reportedly making headway in its bid to acquire the $30 billion marketing software company HubSpot. That deal, which would be Google’s largest-ever acquisition, is part of the company’s strategy to compete with Microsoft in the cloud applications market.
“It does appear that Google has aspirations to try to take market share from Microsoft in the productivity suite, and they can use HubSpot to bundle applications together for clients,” Cowen analyst Derrick Wood said in a research note seen by Reuters.
Google is the third-largest cloud services provider but holds less than half of the market share of Microsoft. Meanwhile, Amazon controls a third of the market.
Reports of Google’s potential acquisition first surfaced in April, sending HubSpot shares up as much as 11%. HubSpot’s financials keep getting better, though analysts are skeptical over weakened demand for its products. The company swung to a profit of $6 million in the first quarter, with sales surging more than 20% from the prior year. Google’s talks with HubSpot are “ongoing” and no deal has been reached, according to Bloomberg.
While Google’s still behind in the cloud market, it’s on a much more even playing field with Microsoft in the AI space, where it’s vying with a number of Big Tech contenders for dominance — with convincing odds. Google, Microsoft, Meta, and Amazon have all announced major new AI applications and features over the past year as well as their own custom AI chips. But Google dropped a motherload of updates to its suite of AI tools called Gemini during its I/O developer conference, solidifying its spot as a major AI player. A week later, Microsoft made its own AI announcements, but they’re now facing heat from European regulators.
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DiscoverGold
1 month ago
Google launches Trillium chip, improving AI data center performance fivefold
By: Reuters | May 14, 2024
Google parent Alphabet on Tuesday unveiled a product called Trillium in its artificial intelligence data center chip family that it says is nearly five times as fast as its prior version.
"Industry demand for (machine learning) computer has grown by a factor of 1 million in the last six years, roughly increasing 10-fold every year," Alphabet CEO Sundar Pichai said in a briefing call with reporters. "I think Google was built for this moment, we've been pioneering (AI chips) for more than a decade."
Alphabet's effort to build custom chips for AI data centers represents one of the few viable alternatives to Nvidia's top-of-the-line processors that dominate the market. Together with the software that is closely tied to Google's tensor processing units (TPUs), the chips have allowed the company to take a significant share of the market.
Nvidia commands roughly 80% of the AI data center chip market, and the vast majority of the remaining 20% is various versions of Google's TPUs. The company doesn't sell the chip itself, but rents access through its cloud computing platform.
The sixth-generation Trillium chip will achieve 4.7 times better computing performance compared with the TPU v5e, according to Google, a chip designed to power the tech that generates text and other media from large models. The Trillium processor is 67% more energy efficient than the v5e.
The new chip will be available to its cloud customers in "late 2024," the company said.
Google's engineers achieved additional performance gains by increasing the amount of high-bandwidth memory capacity and overall bandwidth. AI models require enormous amounts of advanced memory, which has been a bottleneck to further boosting performance.
The company designed the chips to be deployed in pods of 256 chips that can be scaled to hundreds of pods.
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DiscoverGold
2 months ago
Bull of the Day: Alphabet (GOOGL)
By: Zacks Investment Research | May 1, 2024
Following Alphabet’s (GOOGL) blowout first quarter results last week, and the announcement of its first-ever dividend, now appears to be a promising time to invest in the Magnificent Seven titan.
To that point, Alphabet’s stock currently sports a Zacks Rank #1 (Strong Buy) and is the Bull of the Day as earnings estimate revisions have soared for the cloud and search engine provider.
Strong Performance Overview: Alphabet’s strong Q1 results were attributed to Google Search, Cloud, and stronger advertising growth on YouTube. Alphabet also emphasized that it is well-positioned for the next wave of artificial intelligence through its platform Gemini which is a generative AI multimodal with understanding across audio, video, and text code.
This has now led to a +17% year-to-date surge in Alphabet’s stock which has impressively topped the S&P 500’s +8% and the Nasdaq’s +4%. Furthermore, GOOGL has noticeably outperformed the broader indexes over the last year.
Image Source: Zacks Investment Research
Soaring EPS Estimates
Earnings estimates for Alphabet’s fiscal 2024 and FY25 have soared in the last week after the tech giant reported Q1 earnings of $1.89 per share which increased 61% year over year and crushed the Zacks Consensus of $1.49 a share by 27%.
Largely attributing to Alphabet’s strong buy rating is that FY24 earnings estimate revisions have risen 10% since the company’s exhilarating Q1 report from estimates of $6.79 a share to $7.49 per share. Plus, FY25 EPS estimates are up 10% in that last week as well, rising from projections of $7.78 a share to $8.61 per share.
Alphabet’s annual earnings are now projected to rise 29% this year with another 15% EPS growth expected in FY25.
Image Source: Zacks Investment Research
Magnificent Seven Value
Adding value to shareholders and peaking their optimism, Alphabet announced a quarterly dividend of $0.20 per share with the first payout set for June 17 to shareholders on record as of June 10. Notably, five of the Magnificent Seven stocks now offer dividends with Alphabet joining Microsoft (MSFT), Apple (AAPL), Nvidia (NVDA), and Meta Platforms (META) in this regard.
However, what also stands out about Alphabet is that outside of Meta Platforms, it is the most reasonably valued of the Mag Seven in terms of P/E valuation at 24.3X forward earnings and close to the S&P 500’s 21.5X.
Image Source: Zacks Investment Research
Bottom Line
Alphabet continues to rightfully retain its title as a “Magnificent Seven” stock that has significantly boosted the market’s returns in recent years and is one the most appealing technology-driven companies to invest in at the moment.
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DiscoverGold
2 months ago
Big Money Seeking Out Alphabet Shares
By: Lucas Downey | April 30, 2024
• Shares of Google parent company Alphabet Inc. (GOOGL) are up 19% in 2024 so far. A recent dividend announcement, solid earnings, and Big Money investors are pushing the technology company’s stock higher.
Alphabet Shares Under Big Accumulation
Institutional volumes reveal plenty. In the last year, GOOGL has enjoyed strong investor demand, which we believe to be institutional support.
Each green bar signals unusually large volumes in GOOGL shares. They reflect our proprietary inflow signal, pushing the stock higher:
Source: www.mapsignals.com
Plenty of technology names are under accumulation right now. But there’s a powerful fundamental backdrop going on with Alphabet.
Alphabet Fundamental Analysis
Institutional support and a healthy fundamental backdrop make this company worth investigating. As you can see, GOOGL has had impressive sales and EPS growth in recent years:
• 3-year sales growth rate (+19.9%)
• 3-year EPS growth rate (+33.5%)
Source: FactSet
EPS is estimated to ramp higher this year by +14.5%.
Now it makes sense why the stock has been powering to new heights. GOOGL has a yearslong track record of solid earnings.
Marrying great fundamentals with our proprietary software has found some big winning stocks over the long term.
Alphabet has been a top-rated stock at MAPsignals. That means the stock has unusual buy pressure and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.
It’s made the rare Top 20 report multiple times over the years. The blue bars below show when GOOGL was a top pick…pushing higher over time:
Source: www.mapsignals.com
Tracking unusual volumes reveals the power of money flows.
This is a trait that most outlier stocks exhibit…the best of the best. It’s simple – Big Money demand drives stocks upward.
Alphabet Price Prediction
The GOOGL rally isn’t new at all. Big Money buying in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a diversified portfolio.
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