BofA Raises Alphabet Target to $280, Reiterates Buy on Strong Ad Checks and Cloud Momentum

Core Viewpoint - BofA Securities raised its price target on Alphabet to $280 from $252 while maintaining a Buy rating, anticipating strong third-quarter results driven by increased ad spending and a favorable macro environment [1] Group 1: Financial Projections - BofA projected third-quarter revenue and EPS of $86.0 billion and $2.17, respectively, compared to consensus estimates of $85.0 billion and $2.29 [2] - The firm adjusted its revenue expectations upward while also increasing expenses to account for approximately $3.9 billion in legal charges [2] - Operating expenses were estimated at $29.6 billion, with an operating margin decrease of 259 basis points to 35.7%, although it is expected to improve year-over-year when excluding one-time legal costs [2] Group 2: Market Trends and Performance - Analysts expect another strong quarter for Search, with stable paid-click trends, which may alleviate investor concerns regarding AI-related disruptions [3] - BofA noted that better macro-driven results could support multiple expansions for Alphabet [3] - Management is anticipated to emphasize the momentum in Gemini usage, and recent wins in Google Cloud could enhance backlog growth, contributing positively to Alphabet's overall value [3]