Alphabet(US:GOOGL) Goldman Sachs·2025-05-21 06:36Investment Rating - The report maintains a Buy rating for Alphabet Inc. with a 12-month price target of $220 [8][24][27]. Core Insights - Alphabet is accelerating its AI innovation, particularly through the integration of Gemini AI capabilities across its product suite, which includes Search, YouTube, Gmail, Maps, Workspace, Google Cloud, and Android/Pixel [1][2]. - The company is well-positioned to adapt to the evolving landscape of AI-powered search, with innovations such as AI Overviews and AI Mode, which are expected to enhance user engagement and monetization [2][14]. - Alphabet's long-term strategic positioning is bolstered by its extensive user base, personalization capabilities, and infrastructure, which are seen as competitive advantages as the industry transitions to AI monetization [14]. Financial Projections - Revenue is projected to grow from $295.1 billion in 2024 to $406.6 billion by 2027, reflecting a compound annual growth rate (CAGR) of approximately 11.8% [3][11]. - EBITDA is expected to increase from $127.7 billion in 2024 to $187.9 billion in 2027, indicating strong operational performance [3][11]. - EPS is forecasted to rise from $8.04 in 2024 to $10.59 in 2027, demonstrating robust earnings growth [3][11]. Key Developments - Notable announcements from the Google I/O keynote include the launch of Gemini 2.5, enhancements to AI Overviews in Search, and the introduction of new features in Workspace and Google Cloud [15][18][25]. - The AI Mode in Search is rolling out to users in the U.S., which includes features like Personal Context Mode and Deep Search, aimed at improving user experience and engagement [18][19]. - The introduction of new AI-driven tools such as Canvas for co-creation and Flow for film creation highlights Alphabet's commitment to expanding its AI capabilities across various applications [25][26].