Scotiabank analyst Nat Schindler initiated coverage on Alphabet Inc. (NASDAQ:GOOG) with a Sector Outperform rating (Buy) and a price target of $212.
The analyst says that Google is poised to benefit from AI investments, with monetizable corporate products in its Google Cloud Platform (GCP) and enhanced ad revenue opportunities through Search and YouTube.
Notably, Google is primed to lead the AI wave, leveraging its unmatched data and computing power, adds the analyst.
The analyst writes that while ChatGPT grabbed attention, Google has been advancing AI for decades. Tools like Gemini and Bard are just the latest user-friendly interfaces for its long-standing expertise.
Moreover, Schindler says that Google is the least sensitive to macroeconomic factors among the Big 3, as most of its revenue comes from Search, which correlates with global online transactions—a resilient and expanding market.
The analyst writes that antitrust actions in the U.S. have limited Google's stock performance this year compared to its Big 3 Internet peers, but they see a positive outlook for the company ahead.
Read: Google Cries Foul As DOJ Moves To Break Up Search Giant, Calls Recommendations 'Radical' As Antitrust Ruling Aims To Limit Its Search Market Monopoly
Google was cautious in reducing excess expenses from pandemic-era over-hiring, indicating it has more room to trim costs, adds the analyst.
Schindler says that they will be watching for any shifts in spending with the new CFO.
Price Action: GOOG shares are up 0.96% at $164.75 at the last check Friday.
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