Analyst: Alphabet Shows 'Unprecedented' Ad Revenue Growth

Is any company worth $1,450 per share with a Hold rating? Apparently Loop Capital Analyst Alan Gould thinks so. The analyst raised Alphabet's price target to $1,450 — up $100, with a valuation through 2021.

Gould noted the company's fundamentals remain strong, but the advertising revenue growth "continues at unprecedented scale."

The hold rating reflects the current regulatory environment — privacy and transparency — that poses a challenge, with no expected improvement in the coming year. Last week, Baird Equity Research Analyst Colin Sebastian rated Alphabet with an Outperform at $1,309.00.

Seeking Alpha notes that Alphabet’s share were down 0.2% — $306.25 — in premarket trading on Monday.

While Gould points to advertising as the catalyst, Goldman Sachs analysts point to cloud services as the reason for Alphabet’s growth.

“Alibaba (AliCloud), Azure, Alphabet, and Tencent are all growing at rates above the major average peers, while AMZN, ORCL, and CRM grew at varying rates below the wider market,” according to the Goldman Sachs research note published Sunday.



“We continue to expect that the public cloud landscape will consolidate into an oligopolistic market structure, given the need to develop differentiated, value-add services to draw customers to these platforms (e.g. AI/ML, Containers, Database offerings), and the substantial capex requirements associated with infrastructure build-outs.”

In 2019, based on Gartner’s forecast, Goldman Sachs expects the top three platforms — Amazon Web Services, Microsoft Azure, and Google Cloud Platform — will comprise $57 billion, or 78%, of the total forecast market of $62 billion. That’s up from 59% of the market forecast in 2017, and 66% in 2018.

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