On Monday, Wedbush maintained its Outperform rating on Alphabet Inc. (NASDAQ:GOOGL) with a stable stock price target of $175.00. The firm expressed confidence in Google Search's sustained dominance, countering concerns over potential structural risks.
A comprehensive analysis by Wedbush of Google's Search Generative Experience (SGE) involved testing 1,200 unbranded Google Search queries. The tests, which compared SGE with non-SGE results, revealed similar ad frequencies per result page, indicating that Google's early stages of ad integration into SGE are effective.
The firm acknowledged the uncertainties that may arise from a wider rollout of SGE. Still, they also see a growing belief that, in the long term, SGE could offer monetization opportunities that match or surpass those of traditional Google Search. The initial ad loads observed in the current SGE iteration were promising and reinforced this view.
Wedbush's stance is also buoyed by Google's track record of successfully adapting to platform changes, such as the transition from desktop to mobile browsing. The firm's analyst pointed to Google's consistent ability to optimize and monetize its platforms effectively, anticipating similar outcomes with the upcoming broader launch of SGE.
The analyst's statement highlighted the potential of SGE to maintain, if not enhance, Google's ad revenue streams. This optimism stems from the current ad loads in SGE, which are seen as a positive indicator of the platform's future economic performance.
In conclusion, Wedbush's reiteration of the Outperform rating and the $175.00 stock price target on Alphabet reflects a positive outlook on the company's strategic direction, particularly with the integration and expansion of SGE. The firm's research suggests that Alphabet is well-positioned to continue its dominance in the search engine market and capitalize on new monetization avenues.
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