Oppenheimer Trims Alphabet Price Target to $400
Oppenheimer analyst Jason Helfstein lowered the price target on Alphabet (NASDAQ: GOOGL) to $400 (from $445) while maintaining an Outperform rating.
“We lower our price target to $400 (from $445) on reduced Services margins and higher financing cost. 2Q highlight was 82% y/y GCP growth vs.
63% in 1Q or $4.7B q/ q, with margins +264 bps q/q, suggesting 1.5GW added.
While YouTube beat and accelerated y/y & 2-year stack, Search was in line and stable on 2-year basis, resulting in gross advertising stable on 2-year basis for the fourth consecutive quarter.
Services OI missed Street est as margins declined 345 bps q/q, but up y/y, as AI queries (Gemini/ AI Mode) are being undermonetized.
However, this creates future margin opportunity. No timing on new Gemini Pro model. GCP backlog +11 q/q, but will rely on more 3P commute at lower margins in 2H.
Target assumes 23x ’28E EPS discounted 7%.”
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