Stifel analyst Mark Kelley maintained Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) with a Buy and raised the price target from $154 to $174.
According to the analyst, Alphabet continues to drive growth at scale through strength in mobile search, YouTube, and programmatic advertising while investing in other vital initiatives (cloud, hardware, AI) that should serve as multi-year growth levers.
Kelley noted the competitive threat narrative as vastly overdone and expected Google's AI capabilities to maintain an engaged user base. Google's core business is highly utility and durable as a dominant leader in search and ad-supported online video.
He recommended GOOGL shares, given the supportive valuation on EPS and confidence in the company's long-term growth opportunity.
The analyst's advertising agency checks indicated investments are probably up 5-7% year-on-year, picking up the accumulated Google and Meta Platforms Inc (NASDAQ:META).
He flagged the importance of "Premiumness," especially with short-form videos.
Since most of the ads fail to impress, premium content relative to user-generated content assumes greater significance.
The analyst acknowledged his preference for CTV, especially premium video units within a large media buying platform, making YouTube TV the fourth largest cable network in the country.
So, he spent more time on YT and YTTV than on other CTV platforms. Also, Google has Google Display & Video 360, which lets the consumer do YouTube, YouTube TV, and other CTV. However, Kelley said that Meta's lack of a CTV/premium video ad inventory rendered them incompetent compared to Google.
Meanwhile, Google falls on the winning side of the scale, ad premiums and cookie deprecation.
Kelley expects a continued re-rating for shares as investors become more comfortable with its position in AI and the longer-term upside from CTV.
Price Action: GOOGL shares traded higher by 0.15% at $156.56 on the last check Tuesday.
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