On July 25th, Finance Associated Press reported (editor Bian Chun) that Alphabet's stock price fell on Wednesday. The day before, the company announced mixed financial reports. However, Goldman Sachs analysts still firmly believe in the bullish outlook for Alphabet's AI opportunities.

Although Alphabet's financial report released on Tuesday exceeded expectations, it performed poorly in some key areas. Last quarter, the company's earnings per share were $1.89, compared to an expected $1.85. However, YouTube's ad revenue was lower than Wall Street's expectations at $8.66 billion, compared to an expected $8.95 billion. Capital expenditures for the quarter also exceeded expectations at $13.2 billion.

On Wednesday, Alphabet's stock price fell by more than 5%. The stock has risen about 25% so far this year, exceeding the Nasdaq composite index, which focuses on tech stocks, by nearly 18%.

AI opportunities

After Alphabet released its financial report, Goldman Sachs raised its target price from $211 to $217 in a report, nearly 25% higher than the current $174.37.

Goldman Sachs said its optimism came mainly from Alphabet's AI opportunities.

"Although we cannot refute ongoing investor debates about the future of search, we still believe Alphabet is a company that prioritizes artificial intelligence," said the Goldman Sachs analyst, adding that Alphabet could further integrate its AI tools into its existing applications.

However, during Tuesday's earnings call, investors appeared to be concerned about whether Alphabet's large investment in AI would bring returns. Alphabet executives answered many questions about the monetization of AI, including AI-generated search result summaries and the integration of AI with their cloud business.

Alphabet executives did not provide specific numbers, but emphasized that their AI ambition would yield long-term returns.

"I think over time, this will ultimately be a huge driver," said Alphabet CEO Sundar Pichai when discussing the integration of AI and cloud computing. Pichai also said that AI products may soon generate revenue, rather than just helping companies cut costs and increase efficiency, but he did not provide a timetable.

Pichai also said that AI products may soon generate revenue, rather than just helping companies cut costs and increase efficiency, but he did not provide a timetable.

Goldman Sachs analysts are not worried about the possibility that AI may take a long time to bring in revenue, but they expect investors to continue to focus on the future of Alphabet search, operating margin results, and long-term investments in data centers and technology infrastructure.

Editor / jayden