Phillip Securities Upgrades Alphabet to Accumulate, $425 PT
Phillip Securities analyst Serena Lim Yi Qi upgraded Alphabet (NASDAQ: GOOGL) from Neutral to Accumulate with a price target of $425 (from $450).
“Robust revenue growth across core business segments due to 1) resilient ad performance (+14% YoY) boosted by Gemini integration in Search and increasing Shorts and CTV monetisation; and 2) fastest cloud growth due to strong demand in Enterprise AI products and services (+82% YoY).
Free cash flow turned negative for the first time due to heavy AI investment, but we believe temporary FCF pressure should support stronger long-term AI growth and revenue visibility.
We upgraded to BUY rating but lowered our DCF target price to US$425 (from US$450).
We reduced our FY26e revenue and PATMI forecasts by ~2% and ~4%, respectively, reflecting moderate margin expansion amid ongoing supply chain constraints.
Despite the near-term earnings revisions, we remain constructive on GOOGL’s long-term outlook.
Its vertically integrated AI ecosystem spanning custom silicon, optimised data centres, and high-performing Gemini models should continue to support robust growth across ad and cloud businesses.”
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