Wall Street analysts have cut their price targets for Alphabet (NASDAQ: GOOGL) following disappointing third-quarter earnings that sent Google stock tumbling approximately 10% in extended trading.
Alphabet reported earnings per share of $2.12, below the roughly $3.02 analysts expected, while slowing Search advertising growth and a $9.1 billion quarterly free cash flow deficit raised concerns about its aggressive artificial intelligence (AI) spending.
However, the earnings shortfall was partly driven by an $8.7 billion loss on equity investments, which reduced earnings by approximately $0.55 per share. Meanwhile, Alphabet’s quarterly capital expenditure reached $51.4 billion as the company continued expanding its AI infrastructure.
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Of the 21 analyst updates issued on October 29, 18 involved price target cuts. Scotiabank delivered the steepest reduction, lowering its target by 16.67%, from $450 to $375.
Despite the widespread cuts, major Wall Street firms retained bullish ratings on Google stock. Bank of America lowered its price target from $430 to $380 while maintaining its Buy rating, and Morgan Stanley reduced its target from $400 to $375 while retaining an Overweight rating.
Barclays also cut its GOOGL price target from $425 to $405, maintaining its Overweight rating. Meanwhile, DA Davidson lowered its target from $350 to $300 while keeping its Neutral rating.
The institutions issued revised price targets for Google shares, driven mainly by mixed quarterly execution across its core operating segments. The main catalyst for the target cuts was a notable slowdown in Search advertising revenue growth, which expanded 12% year-over-year (YoY) versus the 15% consensus estimate.
Nonetheless, Wall Street analysts remain optimistic of a potential upside backed by strong momentum in Google Cloud, where revenue surged by 103% YoY to $30.7 billion, amid surging enterprise AI demand.
Is Google stock a buy after the Q3 earnings selloff?
The latest round of Wall Street price target cuts suggests analysts are becoming more cautious about Alphabet’s near-term outlook, particularly as slowing Search advertising growth and rising AI infrastructure spending put pressure on the company’s financial performance.
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However, several major firms, including Bank of America, Morgan Stanley, and Barclays, maintained bullish ratings despite lowering their targets. This suggests the selloff has not fundamentally changed their longer-term investment outlook.
Whether GOOGL stock can recover will largely depend on Alphabet’s ability to translate accelerating Google Cloud growth and AI investments into stronger earnings and cash flow.
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