Evercore ISI Reiterates Outperform on Alphabet, $420 PT
Evercore ISI analyst Mark Mahaney reiterated an Outperform rating and $420 price target on Alphabet (NASDAQ: GOOGL).
“We reit our Outperform rating and $420 PT in the wake of Beat Q2 EPS results.
We have modestly raised our Revenue and Operating Income estimates, tho we have also increased our 2027 FCF loss from $20B to $50B, due to the raised capex guidance.
Q2 Revenue of $119.8B (+23% FXN) and Operating Income of $40.8B (34% Margin) both beat ISI/Street — a 3% Revenue beat and a 1% OI beat.
Fundamentals generally improved, with Revenue growth accelerating, and Operating Margins (ex 1-time items) flattish Y/Y.
The key positives were the very strong Cloud results (82% Y/Y revenue growth, $512B backlog & 36% Op Margins) and the acceleration in YouTube Ads revenue to 13% Y/Y growth.
The negatives were the very modest deceleration in Search Revenue (2 pts deceleration reported to 17% Y/Y, tho only 1 pt ex-FX) and the raised FY26 capex outlook (by $15B to $200B at the midpoint).
The latter caused the stock to sell off moderately in the aftermarket. Our view is that the Core GOOGL Long Thesis is well intact.”
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