谷歌-C：Inline 2Q24 results; GenAI gains traction

Investment Rating - The report maintains a BUY rating for the company, with a target price raised to US$218.00, reflecting an 18.7% upside from the current price of US$183.60 [5][9]. Core Insights - The company reported 2Q24 total revenue of US$84.7 billion, a 14% year-over-year increase, and net income of US$23.6 billion, up 29% year-over-year, exceeding consensus estimates [3]. - The advertising business remains resilient, with Google Search and other revenue growing by 14% year-over-year to US$48.5 billion, driven by retail and financial services [3]. - Google Cloud revenue grew by 29% year-over-year to US$10.3 billion, supported by strong growth in the Google Cloud Platform and contributions from AI [3]. - Operating profit margin (OPM) improved to 32.4%, up 3.1 percentage points year-over-year, attributed to moderate expense growth and a decline in headcount [3]. - The company expects full-year OPM to improve in FY24 compared to FY23, despite anticipated increases in headcount and tech infrastructure expenses [3]. Financial Summary - For FY24E, total revenue is projected at US$344.9 billion, with net profit expected to reach US$92.0 billion, reflecting a 24.7% increase year-over-year [8][21]. - The gross margin is expected to be 57.1% in FY24E, with operating margin projected at 30.4% [8][21]. - The company’s capital expenditure increased by 91% year-over-year to US$13.2 billion in 2Q24, with expectations of maintaining quarterly Capex at or above US$12 billion throughout FY24 [3]. Valuation - The valuation is based on a target P/E multiple of 26x for FY25E, aligning with the sector average [9][10]. - The adjusted net profit for FY24E is estimated at US$116.2 billion, with an EPS of US$7.4 [8][21].