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Alphabet rallied nearly 5 per cent on Wednesday on signs its dominant Google Search business was faring well in an uncertain advertising market and remained unscathed in the face of competition from an Artificial Intelligence (AI)-powered Microsoft Bing.
The world's fourth most valuable firm was set to add more than $100 billion to its market capitalisation, based on premarket movements. Its shares have rallied 39 per cent this year on the hype around AI. Wall Street analysts said the company's better-than-expected quarterly earnings showed the strong position of Google Search, steady growth in the cloud business and that Alphabet was well placed to compete with Microsoft in AI.
“Don't call it an AI comeback,” said analysts at Jefferies, adding that Google has been AI-first company seven years. Jefferies was among the 22 brokerages that raised their price targets, with several of them saying AI had started to contribute to Google's cloud revenue and helped drive a 28 per cent growth in the quarter that widely surpassed expectations. Alphabet has rolled out a series of AI products this year and revamped its search engine with the technology as it competes with Microsoft in a race to dominate the nascent field.
The maker of Windows also topped expectations on Tuesday, powered by growth in its Azure cloud unit, the part of its business best situated to capitalise on the booming interest in AI. The median price target on Alphabet now stands at $138, which is nearly 13 per cent higher than the stock's last close.
