Analysts reboot Google parent stock price target ahead of earnings
What's your sign?
This may be one of the cheesiest pickup lines in creation, but devotees of astrology say they can get insights into someone's personality and habits by their star sign.
Related: Analyst resets Google-parent Alphabet's stock price target after survey
Leos are said to be fiercely proud and confident, while Scorpios have been described as smart, shrewd and stoic.
And then there's Gemini, the third sign in the zodiac, represented by the twins Castor and Pollux. People with this sign are said to be intelligent and loyal and display an ability to pick up knowledge quickly.
NASA named its 1960s two-person space capsule Project Gemini because the craft could carry two astronauts. And late last year, Google parent Alphabet (GOOGL) named its next-generation artificial-intelligence model Gemini because an ability to learn quickly will come in mighty handy.
On June 24 Alphabet said that Gemini would be rolling out as an integrated option for Gmail on the web and in the mobile app to help users respond to emails or summarize existing email threads. Other applications: to answer questions and find specific details about emails in the Gmail inbox and files saved in Google Drive.
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Alphabet CEO Pichai: Developers 'embracing Gemini'
"While Gemini in Gmail helps you view, understand and respond to email content, it also connects to other Workspace apps like Docs, Sheets, Slides and Drive," Alphabet said in a blog post.
Alphabet CEO Sundar Pichai talked up Gemini, originally known as Bard, during the company's first-quarter-earnings call in April.
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"In February, we rolled out Gemini 1.5 Pro, which shows dramatic performance enhancements across a number of dimensions," Pichai told analysts. "It includes a breakthrough in long context understanding, achieving the longest context window of any large-scale foundation model yet."
"Combining this with Gemini's native multimodal understanding across audio, video, text code, and more, it's highly capable," he continued. "We are already seeing developers and enterprise customers enthusiastically embrace Gemini 1.5 and use it for a wide range of things."
The search engine giant reported first-quarter earnings of $1.89 a share, up from $1.17 a year earlier and handily beating the FactSet consensus of $1.51 a share. Revenue totaled $80.5 billion, up from $69.8 billion a year earlier and surpassing FactSet's call for $78.74 billion.
"We are committed to making the investments required to keep us at the leading edge in technical infrastructure," Pichai said. "You can see that from the increases in our capital expenditures. This will fuel growth in cloud, help us push the frontiers of AI models, and enable innovation across our services, especially in search."
Alphabet is scheduled to report second-quarter earnings on July 23.
Wells Fargo analyst Ken Gawrelski on July 8 raised the investment firm's price target on Alphabet to $187 from $168 and kept an equal weight (effectively neutral) rating on the shares. The analyst said that he expected a solid second quarter, but that the catalyst path appears more challenging.
B of A analyst 'positive on Gemini integration'
A repeat of the level at which first-quarter results beat estimates is less likely based on continued tepid search checks and the chief financial officer's tough-comparisons comment, the analyst said. He referred to Chief Financial Officer Ruth Porat's remark last year that the tech company faced "very tough comps in 2021 given the outsized recovery from the pandemic."
Porat was more upbeat in April, telling analysts that “we are very pleased with our financial results for the first quarter, driven in particular by strength in search and cloud as well as the ongoing efforts to durably reengineer our cost base.”
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Meanwhile, Bank of America Securities analyst Justin Post and his team said that Google gained share both globally and in the U.S. in June, marking the second consecutive month and suggesting the AI overviews in search could be aiding usage.
“We remain positive on growing Gemini integration across [the] Google ecosystem and think [the] broader rollout of AI overviews will likely help drive higher usage, while AI integration can increase monetization across Google,” Post said. “Moreover, with a focus on expense management, we think year-over-year margin growth in 2024 will be a bright spot and potential EPS upside driver.”
Post affirmed a buy rating and $200 price target for Alphabet. He said risks for Alphabet this year include the launch of a new web-search product by OpenAI, the Microsoft- (MSFT) backed creators of ChatGBT.
The analyst said the investment firm isn't seeing a major threat from Perplexity AI, the AI chatbot-powered research and conversational search engine that was launched in 2022.
Other potential risks this year include the U.S. Department of Justice's so-called ad-tech trial, in which the government charges that Google monopolizes key digital advertising technologies, collectively referred to as the ad-tech stack. Website publishers depend on that stack to sell ads and advertisers rely on it to buy ads.
In addition, Post said a ruling in the DoJ's search-engine case is expected in the fourth quarter. In this case, the Justice Department, along with several states, alleges that Google has an unlawful monopoly on the search-engine market.
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