Canaccord Reiterates Buy on Alphabet, $450 PT

Canaccord analyst Maria Ripps reiterated a Buy rating and $450 price target on Alphabet (NASDAQ: GOOGL).

“Google reported strong Q2 results, with revenue coming in ~2% ahead of consensus, driven by a nearly 20 ppt acceleration in Cloud growth alongside sustained ad momentum.

AI continues to expand Search usage, with AI Mode surpassing 1B MAUs and driving incremental query growth, Search engagement reaching an all-time high during the World Cup, and the Gemini app now at 950M MAUs, with DAUs tripling over the past year.

The dominant question on the call was whether Google can sustain frontier-level model development, reflecting a less frequent release cadence more recently compared to peer labs as well as the investor perception that the company is lagging in coding.

Management acknowledged the latter as an area for improvement and is focused on iterating quickly, with the newest Flash model gaining more than 10 points on a key coding benchmark vs. the prior version in just six weeks.

Gemini 4, which is in the midst of the company’s most ambitious pre-training run yet, is designed to provide the larger base model needed to compete at the next frontier, and the roadmap calls for rapid iteration on top of that foundation, with a near-monthly model release cadence part of the roadmap.

The second CapEx guidance raise of the year came as the company posted negative FCF in Q2 and continued to describe the backdrop as supply constrained, with June’s equity raise positioned as reinforcing balance-sheet resilience and no further equity issuance planned beyond the ATM program.

GOOGL shares are down modestly after hours, reflecting the incremental CapEx step-up and the near-term Cloud margin commentary around bridging capacity.

That said, we remain constructive on Google’s ability to continue delivering and monetizing frontier-level AI capabilities, and we are raising our estimates slightly while maintaining our BUY rating and PT.”

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