Google owner Alphabet's (GOOG +3.60%) (GOOGL +3.62%) stock rose by 3.6% by 3 p.m. today. The move comes as Wall Street is getting excited about the company's upcoming third-quarter earnings, due Wednesday after the closing bell.
JPMorgan Chase upgrades Alphabet
The market listens when Wall Street companies raise price targets on stocks, particularly when it's coming from an analyst at a heavyweight like JPMorgan Chase. As such, the analyst's reiteration of a "buy" recommendation and a price target hike to $300 from a previous target of $260 helped lift the stock today.
NASDAQ: GOOG
Key Data Points
In addition, the reasoning behind the new price target will please investors. Not only does the analyst see the recent result from a search antitrust case raised by the Department of Justice as removing a risk overhang (Alphabet will not have to sell Chrome, and may continue to pay to preload products, such as being the default search engine on Apple products), but the analyst also sees Google leveraging its strength in artificial intelligence (AI) to improve YouTube advertising revenue and Google Cloud growth.
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Where next for Alphabet?
The company is a cash-generating juggernaut, and YouTube ads and Google Cloud, in particular, are fast-growing businesses that are becoming increasingly important to the company. Suppose the analyst is right that AI will accelerate growth at Google Cloud. In that case, it's reasonable to expect Alphabet to hike capital spending on data centers -- something the rest of the market will be watching closely when management reports on the third quarter on Wednesday.
