Fri Jun 27 20:20:00 UTC 2025: **News Article:**

**Alphabet’s AI Investments Poised to Pay Off, Says Jefferies, Upgrading Stock**

**SAN FRANCISCO, CA** – After a rocky start to 2025, Alphabet (GOOG, GOOGL) may be on the verge of a comeback, according to a new report from Jefferies. Analysts at the firm argue that concerns about Google’s ability to compete in the burgeoning AI landscape are overblown, and that the current stock price presents an attractive opportunity for long-term investors.

Jefferies has maintained its “Buy” rating on Alphabet, with a price target of $210, representing a potential upside of over 20%. This comes despite the stock’s 9% year-to-date decline, which lags behind the Nasdaq and significantly underperforms its “Magnificent Seven” peers.

Led by analyst Brent Thill, the Jefferies report highlights five key factors driving their bullish outlook:

* **Resilient Search Dominance:** Google Search continues to maintain its 90% market share, even in the face of competition from AI-powered chatbots. Its AI Overviews are reportedly used by 1.5 billion monthly active users.
* **Undervalued YouTube:** Jefferies sees YouTube as a key catalyst in a video-first world, generating approximately 30% more revenue than Netflix, while trading at a lower multiple.
* **Gemini’s Growing Power:** Alphabet’s AI model, Gemini, is processing a staggering 480 trillion tokens monthly, showcasing its increasing capabilities and widespread integration across Google products.
* **Cloud Growth Potential:** While trailing Amazon Web Services (AWS) and Microsoft Azure, Google Cloud Platform (GCP) has significant room to expand, particularly leveraging its AI and machine learning leadership, alongside government contracts.
* **Recovering Margins:** Despite heavy AI investments, Alphabet’s operating margin hit a record 40% in Q1 2025, driven by cost-cutting measures and AI-driven efficiencies.

The report also emphasizes Alphabet’s strong financial position, with $84 billion in net cash, allowing for continued share buybacks and innovation funding. Furthermore, Jefferies points to Alphabet’s attractive valuation, trading at just 11x forward-12-month EV/EBITDA, below its historical average.

“We see an attractive risk/reward in the longterm,” Thill wrote, suggesting that Alphabet’s underperformance this year may be due to market fluctuations rather than fundamental weaknesses.

The company is scheduled to report its second-quarter earnings in late July, providing an opportunity to reaffirm its AI leadership and reset market expectations.

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