Will Alphabet Hit $170? One Wall Street Analyst Thinks So

Alphabet (NASDAQ:GOOG) (NASDAQ: GOOGL) has fallen significantly from its previous peak in recent months as concerns about new competition in search, overspending on artificial intelligence (AI) infrastructure and the broader health of the economy pressured the stock. The stock is now down 22% from its peak in July.

Some see the sell-off as a buying opportunity, and one Wall Street analyst recently weighed in on the issue in his analysis of the stock.

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DA Davidson sees growth in Alphabet

DA Davidson began coverage of Alphabet this morning, giving it a Neutral rating, arguing that its core search business faces growing threats and valuation will depend more on the rest of the company, including Google Cloud, which has recently turned profitable.

Davidson analysts also said the company is at a crossroads with AI, with Alphabet and its big tech peers acknowledging how high the stakes are in the new technology. Despite his general caution, Davidson set a price target of $170 on the stock, implying a 13% upside.

Is Alphabet stock worth buying?

In addition to the challenges facing AI startups like Perplexity and now OpenAI’s SearchGPT search product, Alphabet also faces an antitrust lawsuit after a judge ruled that Google’s search engine constitutes an illegal monopoly.

Alphabet stock appears cheap at a price-to-earnings ratio of 21. The company also has a history of recovering from sell-offs, which has historically benefited buyers during downturns.

Barring a significant antitrust ruling such as a split, the stock appears to be a good bet to recoup recent losses as the business remains strong and growing.

Davidson correctly noted that the company’s stock carries long-term risks, but those risks could take years to materialize.

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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has a position in and recommends Alphabet. The Motley Fool has a disclosure policy.