Cloud Gives Boost to GOOGL, Stock Continues All-Time High Run

Core Insights - Alphabet reported a strong third quarter, with revenue of $102.35 billion, up nearly 16% year-over-year, and EPS of $2.87, exceeding estimates by 35% [4][5] - The company is experiencing significant momentum in AI, which is not fully priced in, contrasting with competitors like Meta and Microsoft [4][8] - Alphabet's cloud revenue surged 34% year-over-year to $15.2 billion, outperforming Microsoft's Azure growth [5][17] Financial Performance - Alphabet's operating margins improved to 23.7%, a 650 basis point increase from the previous year [6] - The backlog for the cloud unit reached a record $155 billion, with $47 billion added in the quarter [6] - Search revenue grew by 15% year-over-year, and paid clicks increased from 4% to 7% [5] AI and Cloud Strategy - Over 70% of cloud customers are utilizing AI products, with the Gemini ecosystem attracting large enterprise deals worth around $1 billion [7] - Management raised full-year capital expenditure guidance to $91-93 billion, up from $85 billion, with 60% allocated to servers [7][8] Market Reaction and Analyst Sentiment - Analysts from Goldman and BFA project double-digit upside for Alphabet, with Goldman raising its 12-month price target to $330, indicating a 15% upside [13][15] - BFA's price target is set at $335, emphasizing Alphabet's strong position in AI infrastructure and usage [15][16] - The overall market sentiment is positive towards Alphabet, contrasting with the pressure faced by Meta and Microsoft [8][14]