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On Wednesday, JPMorgan reiterated its Overweight rating and $195.00 price target on Alphabet (NASDAQ:GOOGL) Inc (NASDAQ:GOOG) following the company’s latest Google I/O developer conference. With a current market capitalization of $2 trillion and a P/E ratio of 18.2x, InvestingPro analysis suggests the stock is trading below its Fair Value. The firm’s analyst highlighted Google’s advancements in artificial intelligence (AI) as a key driver for the positive outlook.
The analyst noted that Google is leading the AI space with its Gemini model, which has topped foundational model leaderboards. The recent Google I/O showcased AI Mode for Search, integrating agentic capabilities from Astra, Mariner, and Deep Research, and making Gemini available across various platforms and devices. The speed at which Google is innovating and shipping products was also emphasized, with the AI Mode in Search rolling out to U.S. users only a year after AI Overviews were introduced. This innovation is reflected in the company’s strong financial performance, with revenue growing at 13.1% and maintaining robust profit margins of 58.6%, according to InvestingPro data.
Google’s full-stack approach in AI, including world-class research, custom hardware, robust infrastructure, and developer tools, was recognized as a significant strength. The company’s AI integration across its services processes 480 trillion tokens per month, a substantial increase from the previous year, and has over 7 million developers building with the Gemini API.
The I/O event also introduced updates to Gemini’s subscription tiers, with the $19.99/month Gemini Pro and a new $250/month Ultra tier. Additionally, there was a live demo of Android XR glasses integrated with Gemini, with a consumer model expected in 2026.
Upcoming catalysts for Alphabet include Google Marketing Live, with a focus on new product exposure for marketers, Apple (NASDAQ:AAPL)’s WWDC in June with potential announcements related to Gemini, a judge’s decision on the search commercial trial remedy expected by early August, and the Made by Google event likely in August, followed by an AdTech remedy discovery trial starting on September 22.
Alphabet’s CEO Sundar Pichai kicked off the day with a keynote, and executives including Google DeepMind CEO Demis Hassabis and co-founder Sergey Brin discussed AI frontiers. The firm’s price target for Alphabet is based on approximately 20 times the estimated GAAP EPS for 2026, with current shares trading at around 17 times the estimated earnings, a discount compared to the five-year average. InvestingPro analysis reveals the company maintains an excellent financial health score of 3.3/5, with analyst targets suggesting up to 20% upside potential. For deeper insights into Alphabet’s valuation and 12+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Google has launched the NotebookLM mobile app for both Android and iOS platforms. This development meets the demand from users for a mobile version of the tool, which helps them manage complex information. Meanwhile, Uber (NYSE:UBER) has started offering early access to Waymo rides for selected residents in Atlanta as part of a pilot program. This initiative is a collaboration with Waymo, known for its autonomous vehicles, and aims to refine the service before a full launch later this summer.
Gene Munster from Deepwater Asset Management has highlighted the significance of Google’s upcoming I/O developer conference. The event is expected to address Google’s challenges in monetizing generative AI while maintaining its established business model. Bank of America analysts have observed a shift in browser usage, noting that Google Chrome’s market share has increased, while Safari’s has decreased. This change may explain discrepancies in query volumes reported by Apple and Google.
Additionally, Moltiply Group, the operator of Trovaprezzi.it, has filed a lawsuit against Google, seeking nearly 3 billion euros in damages. The lawsuit alleges that Google abused its market dominance, negatively impacting Moltiply’s subsidiary 7Pixel. This legal action follows a previous fine imposed on Google by the European Commission for similar practices.
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