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The
world's fourth most valuable firm was set to add more than $100
billion to its market capitalization, based on premarket
movements. Its shares have rallied 39% this year on the hype
around artificial intelligence.
Wall Street analysts said the company's better-than-expected
quarterly earnings showed the strong position of Google Search,
steady growth in the cloud business and that Alphabet was well
placed to compete with Microsoft in AI.
"Don't call it an AI comeback," said analysts at Jefferies,
adding that Google has been AI-first company seven years.
Jefferies was among the 22 brokerages that raised their price
targets, with several of them saying AI had started to
contribute to Google's cloud revenue and helped drive a 28%
growth in the quarter that widely surpassed expectations.
Alphabet has rolled out a series of AI products this year and
revamped its search engine with the technology as it competes
with Microsoft in a race to dominate the nascent field.
The maker of Windows also topped expectations on Tuesday,
powered by growth in its Azure cloud unit - the part of its
business best situated to capitalize on the booming interest in
AI.
The median price target on Alphabet now stands at $138, which is
nearly 13% higher than the stock's last close.
The company has a 12-month forward price-to-earnings ratio of
20.51, compared with Microsoft's 31.11 and the industry median
of 15.29.
(Reporting by Aditya Soni; Editing by Saumyadeb Chakrabarty)
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