Investing.com - Commerzbank has raised its target price for Alphabet's (NASDAQ: NASDAQ:GOOGL) Class "C" stock to $220 and continues to recommend the stock as a "Strong Buy." This comes from an analyst note published on Wednesday, which highlights the dynamic development and stable growth potential of Google's parent company. This results in a return potential of around 18.5% from the current price. A stop-loss limit is recommended at $155.00.
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Alphabet, recognized as a "first-round beneficiary" due to its continuous introduction of new AI-driven applications, is acknowledged as one of the leading players in the field of Artificial Intelligence (AI). According to Commerzbank, the company creates a basis for long-term "real-time experiences" by integrating AI into its wide range of products, including Google Search, YouTube, Google Cloud, and Android smartphones.
Commerzbank analysts particularly highlight the impressive development in the advertising business. "The advertising business, especially with the internet search engine and YouTube ad revenue, continues to grow dynamically and has additional revenue potential," the note states. Additionally, the regular dividend payment and the ongoing extensive share buyback program are evaluated positively.
The latest business figures underscore Alphabet's strong position: revenue increased from $267 billion in 2022 to $284 billion in 2023, while net profit rose from $57 billion to $68 billion. Analysts forecast an earnings per share of $7.59 for 2024, which corresponds to a price-earnings ratio (P/E) of 24.5. Additionally, a dividend of $0.41 per share is expected for 2024.
Despite the positive outlook, Commerzbank points out some risks. These include uncertainties in monetizing AI applications and potentially slowing growth in the cloud business. Additionally, stricter regulatory frameworks and intensified competition in both the search engine and cloud sectors could pose challenges.
Overall, Commerzbank remains optimistic about Alphabet's further development and sees the stock as an attractive investment opportunity. "We see further potential for the stock, raise the target price, and adjust the stop-loss accordingly," the analyst note concludes.
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