Alphabet(US:GOOGL) Guotai Junan Securities·2024-07-25 09:01Investment Rating - The report maintains a "Buy" rating for Google (GOOGL US) with a target price of $208 [2][3] Core Views - Google's FY24Q2 revenue and profit slightly exceeded expectations, driven by strong performance in search and cloud businesses [1] - AI is identified as a key growth driver, with the company optimistic about AI prospects [1] - FY24Q2 revenue reached $84 74 billion, up 14% YoY, surpassing market expectations of $84 37 billion [2] - Adjusted EPS for FY24Q2 was $1 89, up 31% YoY, slightly above the market expectation of $1 84 [2] - Operating margin improved to 32%, up 3 2 percentage points YoY, due to effective cost and expense control [2] Business Segment Performance - Google Services revenue grew 11 5% YoY to $73 9 billion in FY24Q2 [2] - Search advertising revenue reached $64 6 billion, up 11% YoY, driven by retail and financial advertising growth [2] - YouTube advertising revenue grew 13% YoY, while Google Network revenue declined 5 2% [2] - Google Cloud revenue surged 29% YoY to $10 3 billion, achieving $1 billion in operating profit [2] - AI infrastructure and generative AI solutions have generated billions in revenue, with over 2 million developers using these services [2] Financial Projections - Revenue forecasts for FY2024E-FY2026E adjusted to $349 5/$383 0/$414 8 billion (previous $356 7/$393 0/$427 9 billion) [2] - Net profit forecasts for FY2024E-FY2026E raised to $94 6/$107 3/$115 8 billion (previous $86 6/$98 6/$106 7 billion) [2] - 2025 P/E ratio set at 24X, implying a target market capitalization of $2 58 trillion [2] Capital Expenditure - FY24Q2 CAPEX reached $13 2 billion, up 91% YoY, driven by infrastructure needs [12] - The company expects quarterly CAPEX to remain at or slightly above $12 billion for FY2024 [1][2] Market Data - Current stock price: $183 60 [3] - 52-week price range: $121 26-$193 31 [4] - Current market capitalization: $2 27 trillion [4]