AMZN - Alphabet gains as JP Morgan lists as top pick for 2024

2023-12-13 08:18:40 ET

Alphabet ( NASDAQ: GOOG ) ( NASDAQ: GOOGL ) shares gained in premarket trading on Wednesday as J.P. Morgan listed the tech giant as one of its top picks for 2024.

Analysts at the firm, led by Doug Anmuth, noted they project 11% revenue growth (in constant currency) for the company's gross revenue, including 10% for search and other, 12% for YouTube and 23% for cloud revenue. The firm also expects improvements in search and YouTube growth based on artificial intelligence tools, the secular shift to digital advertising, continued monetization of YouTube Shorts and favorable comparisons.

The firm maintained its buy rating and raised its price target to $160 from $150 on Alphabet ( GOOG ) ( GOOGL ) shares.

In addition, J.P. Morgan also expects to see greater margin expansion in the second year of the company's efforts to "durably re-engineer the cost base," with the expectation that GAAP operating income margin will rise roughly 175 basis points to 29.2%.

J.P. Morgan also noted the recently released Gemini large language model — in particular the Ultra version — "represents significant innovation & should start to close the Gen AI Gap as it rolls out in early [2024]."

Lastly, Alphabet ( GOOG ) ( GOOGL ) shares are less owned and there is "weaker sentiment" for the stock than there is for other mega-cap tech, as evidenced by it trading at 17 times expected 2025 earnings, the firm explained.

J.P. Morgan also listed Amazon ( AMZN ), Uber Technologies ( UBER ), Match Group ( MTCH ), Vizio ( VZIO ) and EverQuote ( EVER ) as its top picks for next year.

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