Citi has issued a research report adding Alphabet (GOOGL.US) to its 90-day positive catalyst watch list, reiterating a "Buy" rating and increasing the price target from $390 to $405. Analyst Ronald Josey stated that the adjustment is based on a generally favorable catalyst path for the company's core businesses. The watch list is effective until July 13, a period that will see a dense schedule of product launch events and earnings disclosures. Citi highlighted the "Google Cloud Next" conference from April 22-24 as the first key event, followed closely by first-quarter earnings on April 29, the YouTube Brandcast on May 13, and the Google I/O developer conference on May 19-20. The busy five-week window will conclude with the Google Marketing Live event scheduled for May 20. Citi anticipates that across these events, the company will announce product updates related to the Gemini model, search business, YouTube, and cloud services. The firm stated that, given solid performance in online advertising and strong demand for Google Cloud, "we have raised our estimates and believe Alphabet is positioned to deliver revenue and operating income above consensus expectations." Citi noted that the online advertising market is "relatively healthy," which should support continued acceleration in search revenue growth. The bank forecasts first-quarter search revenue to increase by 16.5% year-over-year.
Demand for cloud services and AI remains robust, according to Citi, which described demand for Google Cloud and its AI-driven services as "still solid" and views this as a core driver for potential near-term earnings beats. The bank projects cloud revenue to grow 57.5% year-over-year. "Within this, adoption of Gemini remains a key focus, and as the model is integrated into more Google products, such as Ask Maps, cloud growth should continue, supported by AI demand and partnerships. We continue to expect 2026 capital expenditures to be weighted towards the second half," Josey said. According to Citi's data, Gemini has surpassed 750 million monthly active users on the consumer side. Meanwhile, enterprise adoption is also increasing through offerings like Gemini Enterprise. Alphabet's most recent quarterly report, released on February 5, showed earnings per share of $2.82, beating the consensus estimate of $2.59. Revenue reached $113.83 billion, an 18% increase year-over-year, also exceeding expectations of $111.24 billion. The company also announced a quarterly cash dividend of $0.21 per share, which annualizes to $0.84, representing a dividend yield of approximately 0.3%.
