Positive Sentiments Surrounding Google’s Growth Potential
With accelerating ad revenue, favorable sales in search and cloud services, and AI tailwinds, Jefferies analyst Brent Thill believes that Google has the potential to climb higher, despite already witnessing a 58% increase in 2023. Thill expressed these positive sentiments in a recent note to investors, summarizing the overall mood surrounding Alphabet’s stock.
Advertising Continues to Drive Google’s Dominance
Advertising plays a pivotal role in Google’s success, and industry experts expect that Google Search will maintain its position as the leading platform for digital ad spending. Although market share is expected to moderately decline from 23% in 2023 to 22% in 2025, YouTube’s share is anticipated to experience a slight increase from 24% in 2023 to 25% in 2024-2025. Cowen analyst John Blackledge raised his price target for Google shares and maintained an outperform rating based on these survey results. He predicts fourth-quarter revenue of $67.4 billion, surpassing street estimates by 2%.
Antitrust Concerns Loom Despite Positive Outlook
While the market is optimistic about Google, there are some regulatory challenges on the horizon. The Justice Department’s lawsuit against Alphabet is awaiting a verdict, and the Federal Trade Commission is currently investigating the generative AI investments and partnerships of Alphabet, Amazon.com Inc., Anthropic, Microsoft Corp., and OpenAI Inc. Google already faced an anticompetitive lawsuit from Epic Games Inc., which the company lost. Wells Fargo analysts caution that regulatory risks and emerging AI developments continue to be a cause for concern in the fiscal year of 2024. The outcome of ongoing regulatory and legal matters, including Play Store, Search, and Ad Tech, could impact Google’s performance.