Google AI, full steam ahead! Why is Wall Street optimistic? Cloud computing remains the key to valuation improvement!
Wall Street believes that this year's Google Cloud Conference has reduced doubts about Google Cloud's AI capabilities. Expanding the scale of cloud computing remains a key factor in upward revisions of the company's mid-term revenue and earnings per share. It is believed that by 2025, Google Cloud will maintain an annual growth rate of around 20%, and cloud computing will also boost Google's valuation.
First, it was announced that the collaboration between Dolphin Research and NVIDIA has expanded to advanced cloud computing. Then, there was an implication that the next generation flagship smartphone, which will be released next month, may have artificial intelligence (AI) capabilities. The road of Google AI is getting wider and wider!
What's worth noting is that at the annual Google Cloud Next conference, Google announced the expansion of its Vertex AI and Duet AI systems. The former allows companies to train and deploy their own machine learning models, while the latter is similar to Microsoft 365 Copilot.
How does Wall Street view Google's AI progress? Two words: optimistic!
JPMorgan Chase was the first to express optimism about the rapid launch of Duet AI. They stated, "Overall, this conference has strengthened Google's strong AI positioning in the field of cloud computing." It can also be seen that Google Cloud remains an important source of growth for Alphabet, Google's parent company.
The aforementioned investment bank predicts that by 2023, Google Cloud's revenue will reach $33 billion, with a year-on-year growth rate exceeding 26%, making it the fastest-growing company under Alphabet.
Therefore, the bank has given Google a "buy" rating with a target price of $150. Based on the latest closing price, this means there is still a 10% upside potential!
KeyBanc further pointed out that "expanding the scale of cloud computing is still a key factor affecting the upward revision of the company's mid-term revenue and earnings per share." They believe that by 2025, Google Cloud's business will maintain an annual growth rate of around 20%, which will also boost Google's valuation.
Bank of America has also raised Google's target price from $142 to $146, an increase of 3%. They stated that the numerous partnerships and new AI and machine learning capabilities are among the highlights of the conference. This event also helps reduce market doubts about Google Cloud's AI capabilities, as Google Cloud is clearly integrating various LLM models and natural language processing capabilities.