HSBC Initiates Alphabet Coverage With Buy Rating And $285 Price Target

Core Viewpoint - HSBC initiated coverage on Alphabet Inc. with a Buy rating and a price target of $285.00, emphasizing confidence in the company's artificial intelligence strategy and diversified business model [1] Group 1: AI Ecosystem and Competitive Position - Alphabet's AI ecosystem, anchored by its Gemini model and custom chip development, positions the company strongly in the cloud and advertising sectors [2] - Google DeepMind is highlighted as a key advantage that underpins Alphabet's innovation [2] Group 2: Business Valuation and Market Share - Google Search and Google Cloud are identified as the company's two most valuable businesses, with expectations that AI Overviews and browser-based Gemini integrations will help maintain Google's approximately 90% share in the traditional search market [3] - HSBC projects that generative AI adoption will drive new customer acquisitions for Google Cloud and reinforce cloud lock-in effects [4] Group 3: Growth Prospects and Financial Metrics - YouTube is expected to benefit from continued growth in paid subscriptions and connected TV advertising [4] - The firm values Alphabet using a sum-of-the-parts approach, forecasting about 16% upside potential, with the stock's 22.6x FY26 GAAP P/E multiple justified by robust growth prospects in cloud and YouTube [4]