Stock market today: S&P 500 notches 4th consecutive record as Google earnings fuel AI hopes

Wall Street analysts were bullish on Alphabet stock following the Google parent’s earnings, as Search revenue continued to climb despite fears of AI displacing the dominant search engine.

“Another stable qtr for Search results increases our confidence in the AI transition and should ease concerns on a potential revenue reset,” Bank of America analyst Justin Post wrote in a note. Post raised his price outlook on Google shares to $217 from $210.

Post and other analysts noted that AI Overviews helped drive 10% more Search queries for the types of searches that the AI is used for. The Overviews has 2 billion monthly users, and the Gemini app has hit 450 million monthly active users.

RBC Capital analyst Brad Erickson raised his price target on Google shares to $220 from $200, saying, “We still believe that GOOGL’s AI competitors along with its own AI search tools are driving traffic headwinds across the internet, and yet, it is still finding a way to distribute enough intentful volume to grow the business plenty fast.”

Still, Alphabet has fallen short of giving hard dollar figures for its AI business while focusing on how the technology is driving growth in its existing businesses.

Notably, analysts didn’t seem discouraged by Alphabet raising its capital expenditure guidance for the year to $85 billion from $75 billion, driven by spending in infrastructure such as data centers and server equipment to power AI.

Erickson said the company’s “AI investment decisions are being made with clear ROI signals in front of it.”