What analysts expect from Google’s cloud event

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What analysts expect from

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’s cloud event

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cloud has an opportunity to differentiate its cloud offering, improving market share and street sentiment,” wrote Bank of America’s Justin Post. GOOGL YTD mountain Alphabet shares in 2024 The event comes amid a rocky ******* for the company as it grapples with dwindling investor appetite and some AI mishaps . The search giant is up more than 12% this year and outperforming the major U.S. stock indexes, but lagging major peers such as Nvidia ,

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. Wall Street expects the company to right the ship over the long run , but many see the flubs pressuring the stock in the near future. This week’s event, however, could mark a turnaround in the right direction and help lift sentiment toward the company’s AI developments. “Positive commentary on advances in AI infrastructure, Gemini’s capabilities vs competitive LLMs, or traction with AI customers (after a strong 4Q vs estimates) could address some of the AI-related overhang on the stock,” Post said. The analyst is bracing for a slew of product announcements from the technology behemoth. This includes potential updates to its Gemini large language model slated for December, along with updates on cybersecurity, the company’s tensor processing unit capabilities, and AI features that can improve workspace productivity. Ahead of the keynote, the company announced new Arm-based custom server chips available later this year. Rivals

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have undertaken such efforts for years. Post views the cloud as a potential “positive driver” for the stock that can lift sentiments due to accelerating AI demand and the segment’s faster growth than the ad business. Rising margins should also benefit the company’s earnings per share. Given this setup, Post estimates that

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Cloud revenues can hit $41 billion this year and $58 billion by 2026, while margins can jump to 13%. Cloud revenues alone could contribute $400 billion to $500 billion to 2026 revenues, Post said, noting that it equates to as much as a fourth of the company’s current market capitalization. Post has a buy rating on Alphabet and a price target of $173 per share, implying upside of 11.7% from Monday’s close. Morgan Stanley’s Brian Nowak also highlighted the event as one of five potential catalysts for the stock through the beginning of June. The firm is on the lookout for more examples of how the cloud is benefitting from the AI transformation, he said. “The potential for better than expected top-line, EBIT beats – from durably re-engineering the opex base – and new product announcements set GOOGL up for a strong performance this Spring,” Nowak wrote. Nowak rates Alphabet shares as overweight. His price target of $165 per share implies upside of more than 6%.

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