Citi maintains a "Buy" rating on Alphabet Inc. (GOOGL) with a target price of $232, driven by anticipated strong Q4 2024 results, particularly in Search and Google Cloud. The report highlights Google's GenAI roadmap, including the rollout of Gemini 2.0, as a key growth driver. Citi projects a 33% y/y increase in Google Cloud revenue and an 11% y/y growth in Search revenue, supported by AI Overviews and PMax adoption. Operating income is expected to reach $31.6 billion, with a 32.8% margin, surpassing consensus estimates. Citi notes, "We believe Google’s GenAI products are gaining share," and anticipates continued efficiency gains and a robust CapEx framework for 2025.
Despite FX headwinds, Citi remains optimistic about Google's competitive positioning in the online advertising space, though it acknowledges regulatory challenges and competition from other GenAI search engines. The valuation is based on 22.5x the 2026E GAAP EPS of $10.27, reflecting a healthy advertising environment and improving profitability.
As of February 3, 2025, Alphabet's stock is trading at $202.85, down 0.57% from the previous close.