Alphabet (GOOG, Financial) easily topped Wall Street estimates with its first-quarter results, delivering strong gains across its Services and Cloud units that left analysts broadly impressed.
Revenue rose 12% year-over-year to $90.23 billion, outpacing the $89.15 billion consensus forecast. On a constant currency basis, growth was even stronger at 14%. Earnings also surprised to the upside, with GAAP EPS coming in at $2.81 — a full 80 cents above expectations.
What Analysts Are Saying:
Bank of America reiterated its Buy rating and raised its price target to $200 from $185, calling it “a clean quarter.” Analysts highlighted better-than-expected Search and Subscription results, with Search revenue climbing 10% year-over-year. Operating margins also improved sharply, up 233 basis points overall and 267 basis points in core Services.
Wedbush maintained an Outperform rating and increased its target to $200 from $190, citing "strong 1Q results" led by advertising strength. Analysts noted that management didn't flag any softening in ad trends through mid-April, calming some near-term investor worries. Still, they warned that broader headwinds could limit upside later this year.
Wells Fargo kept an Equalweight rating but nudged its price target up to $175 from $167. The firm pointed out the "conspicuous lack of macro commentary," interpreting it as a sign of continued resilience but not a full green light for digital advertising. Wells Fargo expects search growth to cool later in the year.
Evercore ISI reiterated its Outperform rating with a $205 price target, calling the report "very solid." Analysts pointed to three key positives: steady ad revenue growth from Search and YouTube, a rebound in operating margins to 34%—their highest level since 2013—and Alphabet's increased focus on shareholder returns, including a 5% dividend hike and a new $70 billion stock buyback program.
Overall, Alphabet's Q1 performance was a strong signal of stability in core digital advertising markets, even as concerns about a potential slowdown later in the year linger.
