Wall Street analysts assess Google's earnings beat

Investing.com -- Alphabet’s better-than-expected second-quarter results prompted a wave of positive reactions from Wall Street, with analysts pointing to accelerating growth in Cloud and Search, expanding margins, and the firm’s aggressive AI strategy.

Alphabet reported Q2 EPS of $2.31, $0.14 better than the analyst estimate of $2.17, while revenue for the quarter came in at $96.43 billion versus the consensus estimate of $93.9 billion.

Bank of America said Alphabet delivered “another strong Q,” with revenue topping estimates, and Search and Cloud showing standout growth of 12% and 32% year-on-year, respectively.

“We are raising estimates to reflect higher growth across all key segments,” the analysts wrote, lifting their price objective to $217.

Morgan Stanley also highlighted the acceleration, noting that “GenAI-enabled innovation is driving faster growth” across Search, YouTube and Cloud.

While earnings estimates were mostly unchanged due to offsetting higher investment, the bank maintained an Overweight rating and raised its target to $210.

DA Davidson echoed the upbeat tone, saying Alphabet’s (NASDAQ: GOOGL) “full-stack AI approach” is fueling double-digit Search growth and faster Cloud adoption. The firm raised its price target to $180 from $160.

Piper Sandler raised its price target to $220, citing 14% revenue growth, a 2-point acceleration from the first quarter. “Results at Cloud/Search were strong,” the analysts said, adding that Capex will ramp through the second half.

Still, some analysts urged caution. MoffettNathanson pointed to long-term uncertainty around the sustainability of Search revenue in the AI era, writing, “The heart of the Alphabet financial model is Google Search and that seems to be more uncertain than ever before.”

Wolfe Research acknowledged Alphabet’s “beat across the board” and raised estimates, but said shares may remain “range-bound until after the [antitrust] ruling.”

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