Google draws praise from analysts after going all in on AI in Vegas: Cloud Next '24
Apr. 10, 2024 9:20 AM ET
By: Brandon Evans, SA News Editor
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Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google Cloud Next 2024 event in Las Vegas kicked off Tuesday, highlighting success stories stemming from its artificial intelligence infrastructure, and drawing positive reactions from most financial analysts.
In the eight-month period following the last Google Cloud Next, Google announced and rolled out the Gemini models, introduced 1,000-plus product advances, expanded its infrastructure to 40 regions and announced six new subsea cable investments, according to J.P. Morgan.
"As such, we believe the focus on Gemini and gen AI applications is the natural next step, and customer adoption and usage of Gemini and gen AI powered offerings should support strong Google Cloud growth — we project +24% reported Google Cloud revenue growth in 2024 and +22% in 2025," said J.P. Morgan's Doug Anmuth, in a note Wednesday.
On Tuesday, Google announced its custom CPU Axion and its AI-powered video creation Workspace App called "Vids." J.P. Morgan believes both of these will add to incremental Google Cloud use cases.
Axion, Google's first custom Arm-based CPU, delivers up to 50% better performance and up to 60% better energy efficiency than comparable current-generation x86-based instances.
J.P. Morgan maintains its Overweight rating for Google with a price target of $165.
Google's competitive edgeGoogle also revealed the deep technical integration across its infrastructure, models, platform services and applications, which gives it a competitive edge, according to Morgan Stanley.
"Google demonstrated the benefits of its deep technical integration across each layer of the AI tech stack, which should help them better compete with AWS ( AMZN)/Azure ( MSFT) going forward," said Morgan Stanley equity analyst Brian Nowak and others in a note.
The migration of Gemini 1.5 Pro from limited to public preview and the release of its new AI agents, which are customizable through Vertex AI, was also notable, Nowak noted.
"While Google will need to prove that this deep level of integration across the AI tech stack can translate into faster Google Cloud growth, we walk away more constructive on its competitive positioning," Nowak added.
Morgan Stanley maintained its Overweight rating for Google and a price target of $165, following Tuesday's opening keynote.
Wedbush analysts also gushed over Google's competitive positioning.
"We continue to highlight the strength of Alphabet's competitive positioning more broadly, supported by an unmatched breadth of data to develop and train AI models, AI-optimized compute infrastructure supported by custom silicon, access to leading engineering talent and close integrations with partners across all layers of the generative AI stack," said Wedbush analyst Scott Devitt in a note.
Wedbush maintains an Outperform rating for Google and a $175 price target.
Google closed Tuesday 1.3% higher, but was down nearly 1% during premarket trading Wednesday. Google Cloud Next 2024 continues through Thursday. All available live and playback sessions can be found here. |
