Google stock ($GOOGL) nudged up in early trading today after Mizuho analyst James Lee raised his price target for Alphabet to $460 from $420. The firm kept its “Outperform” rating on the stock, suggesting that there is still plenty of room for the company’s value to climb. This update follows a massive quarterly performance that has changed how many experts view the future of the search giant.
James Lee Increases Google Stock’s Price Target
The decision to raise the price target comes after Alphabet reported a “blockbuster” first quarter that far exceeded what Wall Street expected. The company reported earnings of $5.11 per share, which was nearly double the $2.64 that analysts had predicted. Total revenue reached $109.9 billion, representing a 22% jump from the previous year.
James Lee noted in his analysis that “Street numbers underwrite too little revenue upside and margin power,” signaling that the market is still underestimating the company’s potential.
Google’s Cloud Success Fueled a Revenue Jump
The biggest surprise for the market was the explosive growth of Google Cloud, which saw its revenue surge by 63% to over $20 billion. This growth was even faster than that of its biggest rivals Amazon ($AMZN) and Microsoft ($MSFT).
Additionally, the backlog of orders for the cloud business has nearly doubled to $460 billion, proving that large companies are lining up to use Alphabet’s AI-driven services. James Lee remains aggressive in his outlook because he believes the value of the cloud and AI divisions should be viewed separately at parity with global software peers.
Alphabet’s Strong Profits & AI Spending Drive an 18% Potential Gain
With the stock currently trading near its 52-week highs, the new $460 target suggests a potential upside of roughly 18.4% from its current price.
Alphabet is also focusing on its long-term future by planning to spend between $185 billion and $190 billion on new infrastructure and AI technology through 2026. This massive investment aims to keep the company ahead of the competition as artificial intelligence becomes the primary driver of growth for the digital economy.
Is Google a Good Stock to Buy?
Alphabet’s stock (GOOGL) continues to carry a Strong Buy consensus, based on 33 analyst ratings over the past three months. Out of those, 28 call it a Buy, while five recommend a Hold. None of the analysts currently suggest selling.
The average 12-month GOOGL price target sits at $425.19 which represents 7.4% upside potential.
