Loop Capital likes what it sees from Alphabet . The investment firm upgraded the “Magnificent Seven” stock to a buy rating from hold. Analyst Rob Sanderson also lifted his price target to $320 per share from $260, which implies upside of 19% from Monday’s close. Sanderson pointed to an alleviation in investor concerns regarding the sustainability of search revenue growth due to AI cannibalization and transition risk. GOOGL YTD mountain GOOGL YTD chart “Google Search revenue growth accelerated to 15% in 3Q, the strongest quarter since the tail end of the COVID boom,” he wrote. “Continued strength is disproving concerns (or at least postponing concerns) that AI chatbots are encroaching on Google as a primary starting point for the information seeking journey of users.” The analyst also pointed to growing momentum in Gemini as a factors that could drive shares higher from here. The Gemini app now boasts over 650 million users and queries have increased by threefold quarter-over-quarter, he said. “Recent press reports suggesting that Google has essentially won the bake-off to power Apple products highlight advancement in its competitive position and ability to bring value to partners,” he said. Sanderson pointed to growing momentum in Google Cloud as another catalyst, adding that Google Cloud’s revenue swelled by 35% in the third quarter to a $61 billion run rate. Sanderson added that he sees potential for Google’s tensor processing unit, a custom-designed AI accelerator, to emerge as a major tailwind going forward. “Impressive price-performance benchmarks are making the Google TPU a differentiated driver for the cloud business as the company makes this internal advantage on compute economics available to third-party customers,” he wrote. Shares of Alphabet have surged 51% this year.
