What will the future of viable stock players look like in the next decade? The Collision technology conference and YouTube’s Brandcast advertiser-geared event point to a competitive arena where three leading tech titans look to ramp up on high-tech assets to rise to the top: Amazon.com, Inc. (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB), and Alphabet Inc (NASDAQ:GOOGL).
Colin Sebastian, one of the top performing analysts on the Street has had a week to digest last week’s symposiums and is out with his positive take exploring these compelling investment opportunities. After meeting with various representatives and assessing presentations, the analyst shines light on why voice platforms like Amazon’s Alexa will pilot a new revolution, the future steps Facebook’s Messenger will be taking past the artificial intelligence bots horizon, as well as Alphabet’s goal to capture a bigger slice of the video and television advertising budget pie.
Colin Sebastian has a very good TipRanks score with a success rate of 79% and a high ranking of #14 out of 4,563 analysts. Sebastian realizes 22.6% in his annual returns. When recommending AMZN, Sebastian garners 38.4% in average profits on the stock. When suggesting FB, Sebastian yields 28.1%. When rating GOOGL, Sebastian earns 20.1%.
First, Sebastian dives into the Collision conference, noting that while “a broad range of topics were in focus, […] the common thread was the significant ramp in machine learning/AI projects.” When it comes to Amazon’s roadmap, the analyst sees voice as the technology of the world to come, anticipating a near future of “Alexa Everywhere.”
Cheering this ascent into machine learning and artificial intelligence, believing this will only make the online auction and e-commerce giant that much stronger, the analyst reiterates an Outperform rating on shares of AMZN with a $1,100 price target, which represents a just under 16% increase from where the stock is currently trading.
Sebastian underscores, “At Collision, Amazon VP Steve Rabuchin highlighted that Alexa is enabled by the company’s expertise in computing power (AWS), machine learning and voice recognition. The company has ‘thousands’ of employees working on Alexa, along with ‘tens of thousands’ of third-party developers. Mr. Rabuchin suggested that voice is the next large Internet platform, and that Amazon hopes to make Alexa available ‘everywhere,’ including on numerous third party devices. Also noteworthy, Alexa is helping to improve Amazon’s ‘knowledge graph’ by integrating more sources of data, which we believe will make Amazon a smarter search engine, and potentially more competitive with Google.”
The Street tends to agree with this top analyst’s bullish impression on the giant, considering TipRanks analytics show AMZN as a Strong Buy. Out of 30 analysts polled by TipRanks in the last 3 months, 27 are bullish on Amazon stock and 3 remain sidelined. With a return potential of nearly 14%, the stock’s consensus target price stands at $1,085.42.
Facebook meanwhile has showcased Messenger as the key tool in its back pocket stepping to the forefront, expressing a priority at the Collision conference to move Messenger increasingly into equal parts flashy, yet savvy AI territory. Still notably pinpointing this as an overall win for Messenger’s monetization, the analyst reiterates an Outperform rating on FB with a price target of $163, which represents an 8% increase from where the shares last closed.
“Facebook Messenger moving beyond the bots,” continues Sebastian, elaborating, “At Collision, Messenger head of product Stan Chudnovsky indicated that the rollout of bots last year was a very early step in facilitating interactions between users and businesses. As was outlined at the F8 conference recently, Messenger is moving toward the goal of becoming a ‘personal assistant,’ which in the near term will include more functional interactions, such as bookings and purchases. Mr. Chudnovsky highlighted that usage of Messenger in Asia already includes more direct and AI-enabled interactions between businesses and users, while the Discovery tab within the app is one attempt to encourage similar behavior in the west. Importantly, however, Messenger will supposedly stick with ad-based monetization, given the ‘complexity’ of managing payments and commerce.”
Likewise, the Street backs Sebastian’s bullish attitude on the social media giant. TipRanks analytics reveal FB as a Strong Buy. Based on 31 analysts polled by TipRanks in the last 3 months, 30 rate a Buy on Facebook stock while 1 maintains a Hold. The 12-month average price target stands at $172.97, marking a nearly 15% upside from where the stock is currently trading.
Alphabet impressed at Brandcast, implying a deviation revolving around video advertising budgets, thanks to unique programming shaped for subscription and ad-based models alike. Why the great shift? Sebastian notes that “as the battle for cord cutters increases,” the tech giant is playing it smart, ready to keep up with the changing times to rule the leaderboard.
Therefore, on back of the advertising event, the analyst reiterates an Outperform rating on shares of GOOGL with a $1,100 price target, which represents a close to 15% increase from current levels.
“YouTube is making significant investments in technology and content in order to expand usage in the living room, and attract a larger share of video/TV ad budgets. Already, TVs represent YouTube’s fastest-growing viewing platform (doubling year-over-year), with generating above-average session lengths. Overall, users consume one billion hours/day on YouTube, with more 18-49 year-olds during Prime Time than any other media network. As such, advertisers can potentially reach a larger and more relevant audience on YouTube than on network television, for the same investment,” underscores the analyst. Essentially, the leader who has the key to the advertiser’s financial interests can harness the power to succeed long-term.
Sebastian concludes singing the giant’s praises for its diverse approach, asserting, “Importantly, YouTube continues to pursue hybrid distribution, including specialized ‘channels,’ e.g. YouTube Kids (ad-supported, 8 million weekly viewers); subscriptions, e.g., YouTube Red ($10/month, ad-free music, videos, original programming) and YouTube TV ($35/month for streaming live TV + cloud DVR.)”
The Street also places Alphabet among its most confident investment opportunities, with TipRanks analytics demonstrating GOOGL as a Strong Buy. Out of 25 analysts polled by TipRanks in the last 3 months, 20 are bullish on Alphabet stock and 5 remain sidelined. With a return potential of 8%, the stock’s consensus target price stands at $1,037.14.