This week is shaping up to be an important one for Alphabet (GOOGL) as the Google Cloud Next conference will commence on Tuesday and go through Thursday. If this is to look like last year’s conference, Google is expected to announce new products and partnerships, perhaps including advances in cloud-based machine learning and AI.
Like much of the industry, Alphabet’s stock rose about 16% since the beginning of January. A strong start was much needed for the tech giant, after a 2018 that failed to impress.
Nomura analyst Mark Kelley expects GOOGL to continue increasing, as he maintains a Buy rating and $1,310 price target, which implies nearly 9% upside from current levels. (To watch Kelley’s track record, click here)
Kelley is looking at how new Google Cloud CEO Thomas Kurian’s “product development vision…translates into Google Cloud’s customer focus.” The analyst hopes to “hear more on the addition of Amit Zavery (recently joined from ORCL) to the GCP Team and his plans for the Apigee business,” an API management subsidiary of Google.
Using “initial thoughts on the go-to-market strategy” from Kurian, Kelley says Google “will target six key industries using a lifetime value framework.” This is a shift from its previous focus, with “the new customer acquisition strategy [being] built around targeting clients at varying stages in the transition to digital, and it is significantly expanding its direct salesforce, with vertical specialists selling into specific industries (sales and distribution staff have grown fourfold in the past three years).”
Kelley conceded that Cloud Next not normally a stock catalyst, as investor reaction is usually muted. But the analyst says there is “rising investor interest in Cloud, [that,] coupled with new leadership…could drive more attention than usual.”
Beyond Next, excitement still surrounds the company from many angles. It’s hallmark search engine remains its overwhelming revenue generator, with YouTube continuing to make gains. But investors are extremely excited for Google’s prospects in the auto world, where it’s self driving car company Waymo is expected to offer a tremendous opportunity to boost revenue and diversify its business away from an ad-based model. However, even with all the excitement surrounding self driving cars and Waymo, the company and technology is still young, and much needs to go right in order to convert it from what it is today to the massive company many expect (hope) it can be.
All in all, there is no doubting that Wall Street loves Alphabet. TipRanks analysis of 28 analyst ratings on the stock shows a Strong Buy consensus, with 28 analysts recommending Buy, and only two saying Hold. The $1,351.68 average price target on the stock represents a 12% upside from current levels. (See GOOG’s price targets and analyst ratings on TipRanks)
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