Scotiabank analyst Nat Schindler has thrown his weight behind Alphabet Inc. (GOOG), initiating coverage with a bullish ‘Sector Outperform’ (Buy) rating and setting a price target of $212. Schindler sees Google as a frontrunner in the AI revolution, poised to reap the rewards of its significant investments in this field.
He highlights Google’s strategic advantages, including its dominant position in search, its burgeoning cloud computing platform (GCP), and its unmatched expertise in AI development, spanning decades. While ChatGPT has recently captured the public’s imagination, Schindler emphasizes that Google has been at the forefront of AI for years, with tools like Gemini and Bard representing the latest user-friendly interfaces for its deep-rooted knowledge.
Schindler also points out that Google’s revenue stream is remarkably resilient, primarily derived from its search engine which is tightly linked to global online transactions. This makes Google less susceptible to macroeconomic fluctuations compared to its Big 3 Internet peers.
While antitrust actions in the US have impacted Google’s stock performance this year, Schindler remains optimistic about the company’s future prospects. He believes that Google’s prudent cost management, stemming from its pandemic-era hiring spree, provides further room for cost optimization. Schindler also highlights that he will be closely monitoring any changes in spending under the new CFO.
GOOG shares were trading up 0.96% at $164.75 in Friday’s trading.
