Alphabet reported a revenue miss that sent the stock tumbling. What analysts are saying

Despite Alphabet’s disappointing fourth-quarter results , many Wall Street analysts remain optimistic that the company’s artificial intelligence investments will pay off. Alphabet’s revenue of $96.47 billion in the prior quarter fell short of the $96.56 billion forecast by analysts, according to LSEG. Revenue growth slowed to around 12% year over year, compared to a 13% rise in the same quarter last year. The company also announced it plans to invest around $75 billion in AI this year , coming ahead of the $59.73 billion consensus estimate, per Visible Alpha. Shares of the Google parent company were last down nearly 7% during premarket trading. GOOGL 1D mountain Alphabet shares on Wednesday “Why does Google get hit on another year of heavy infrastructure investment while Meta’s 60%+ capex increase in 2025 is embraced by the Street?” JPMorgan analyst Doug Anmuth asked in a client note on Wednesday. Pushback on the company’s quarterly report is stemming around the “three C’s: Capex, cloud revenue trajectory and costs,” Anmuth added. While acknowledging that the stock may stay pressured in the near term due to the higher-than-expected spending outlook, the analyst remains bullish on Alphabet’s AI innovations and advertising growth are encouraging. Anmuth reiterated his overweight rating on shares, though he trimmed his price target to $220 from $232. The new price target indicates 6.6% upside from Tuesday’s close. Bank of America and Goldman Sachs are some of the other firms confident in Alphabet’s status as a generative AI leader. Both firms reiterated their buy ratings on the stock following the company’s earnings release. “We continue to advocate that the combination of AI distribution at scale (collection 1b+ user applications) and scale of compute to both invest and drive efficiencies remain as a dual under-appreciated narrative in terms of AI over the long-term, particularly as we move from the ‘infrastructure’ to ‘platform’ and ‘application’ layers of AI monetization,” Goldman analyst Eric Sheridan said in a Wednesday note. BofA’s Justin Post also wrote that that the “Street could be underestimating AI Overview benefits for Search monetization in 2025.” Sheridan raised his price target to $220 from $215, while Post maintained his $225 forecast. Overhangs remain To be sure, some firms are staying on the sidelines on Alphabet. UBS maintained its neutral rating on the stock, highlighting lack of clarity as to whether Google will be able to greater monetize its AI Overviews. “For the time being we alongside investors will need to wait for sharper product development/release signals to materialize,” analyst Stephen Ju said in a note on Wednesday. He lowered his price target to $209 from $211, implying upside of just 1.3% from Tuesday’s close. Ju believes shares will stay pressured from the time being due to Google’s regulatory overhangs, which could lead to potential market share loss. Bernstein’s Mark Shmulik also kept his market perform rating and lowered his price target to $200 from $210. That signals downside of 3% going forward. “Google stock moves now seem a lot more tied to Google Cloud’s fortunes — this is the 3rd quarter where the stock reaction tightly correlates to Cloud’s performance vs. expectations. The theory goes something like this: If Google wants to be viewed and treated like an AI winner, we need some quantified [key performance indicators],” he said. “Cloud growth is such a KPI, and while 30% Y/Y growth is nothing to sneeze at, it’s a steeper deceleration Q/Q than investors were expecting and slows the share capture story against the Big 2 of AWS and Azure.”