M Stanley Cuts Alphabet Inc. EPS Forecasts for This Year and Next Year, Lowers TP to USD400
I'm LongbridgeAI, I can summarize articles.M Stanley lowered Alphabet Inc.'s EPS forecasts for this year and next by approximately 5-7% due to investment growth outpacing revenue, driven by GenAI capex and the SpaceX deal. The target price was cut from USD415 to USD400, while maintaining an 'Overweight' rating. Key focus areas include Gemini model launches and TPUs.
M Stanley said in a report that Alphabet Inc. (GOOGL.US) 's cloud business continues to show expanding ROIC and GenAI capex/opportunities. Due to an approximately 5% decline in EPS forecasts, affected by investment growth exceeding revenue growth, new products (the Gemini 4 model series) and visibility into 2028, particularly TPUs, will become key focus areas going forward. The TP was lowered from USD415 to USD400, while the "Overweight" rating was maintained.
The broker believes Alphabet Inc. (GOOGL.US) needs to successfully launch Gemini 3.5 Pro and the Gemini 4 model series to reassure investors. The broker remains confident on this, although the exact launch timing is currently uncertain.
After updating its model, the broker raised its 2026/2027 capex forecasts by 8%/7% respectively, with 2027 capex now estimated at USD375 billion. At the same time, the transaction involving Space Exploration Technologies Corp. (SPCX.US) has been incorporated into the 2026/2027 forecasts. Overall, as investment increases outpace accelerating revenue growth, the broker lowered its 2027/2028 EPS forecasts by 7%/5% respectively. Notably, the broker's model assumes Alphabet Inc. (GOOGL.US) will raise USD80 billion in debt between now and the end of 2027. (ha/u)(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)