The advent of artificial intelligence (AI) over the past year or so has given investors much to consider. Yet it's important to remember that, in most cases, AI is just one part of a much larger puzzle, with each piece contributing something to the overall picture.
Keybanc analyst Justin Patterson raised his price target to $175 on Alphabet (GOOGL 0.75%) (GOOG 0.87%) stock while reaffirming his overweight (buy) rating. Despite notching gains of 49% during the past 12 months, this suggests potential upside of roughly 14% over the coming year compared to Friday's closing price.
NASDAQ: GOOGL
Key Data Points
Lots of moving parts
The analyst doesn't see much that will change Alphabet's positive investing thesis when the company reports its first-quarter results after market close on Thursday. That said, he believes there are plenty of potential catalysts that could propel the stock higher in the weeks and months to come.
Alphabet has been working to achieve "durable cost savings" this year as it tries to reduce its spending. The company has already conducted several rounds of layoffs as part of its restructuring.
Earlier this year, Meta Platforms joined the fraternity of technology companies paying a dividend, and some investors are watching carefully to see if Alphabet will follow suit. If the Google parent were to announce a payout, that could boost the stock price, as income investors rush to buy shares ahead of the first payout.
One issue that has been weighing on Alphabet stock is the uncertainty surrounding CFO Ruth Porat. Last year, Porat announced she would step down to take on the role of president and chief investment officer, though she plans to remain as CFO until a replacement is found. Wall Street dislikes uncertainty, so finding someone to fill the role would be a positive catalyst.
Finally, at 27 times earnings, the stock is comparable to the price-to-earnings (P/E) ratio of the S&P 500, with greater upside potential.
