Market Overview

What Are Facebook And Google Building? A Look At The Tech Giants' R&D Spending

Share:
What Are Facebook And Google Building? A Look At The Tech Giants' R&D Spending
Related FB
Bulls & Bears Of The Week: Apple, Facebook, Home Depot, JCPenney And More
Munster: There's Something 'Fundamentally Wrong' With Facebook
Amazon's Margins: What Will They Be In 2029? (Seeking Alpha)
Related GOOG
Pot Stocks, ETFs, Top News And Data From The Cannabis Industry This Week
Munster: There's Something 'Fundamentally Wrong' With Facebook
Link tax may shutter Google News in EU (Seeking Alpha)

The forward-thinking, explorative segments of Facebook, Inc. (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) reported a combined $24 billion in annual research and development.

The investments signal heightening competition for users’ time, data and money.

The Rating

Morgan Stanley analyst Brian Nowak maintained Overweight ratings on the stocks, with a $1,200 price target for Alphabet and a $210 price target for Facebook.

The Thesis

As demonstrated at the Facebook F8 and Google I/O conferences this month, Facebook and Alphabet are investing in platform updates and expansions to improve user engagement and retention and to monetize small-to-medium business client interactions.

Morgan Stanley projects that improved SMB offerings and capabilities from Facebook and Google will lead to higher SMB spending, Nowak said in a note: "SMB spend can scale quickly too."

Facebook is launching Oculus Go VR and upgrading its platforms with dating features, filters and group video calls.

At the same time, Google is expanding Assistant’s capacities, compatibilities and media; rolling out a personalized news app; better personalizing Maps and local search features; adding new search products to Google Lens; advancing Waymo’s autonomous services; and building diagnostic and predictive health care tools through Verily.

“GOOGL assistant is making impressive strides, and GOOGL's underappreciated optionality (maps/hardware/Waymo/Verily) was reinforced,” the analyst said. 

Morgan Stanley estimates Google could add about $3 billion in annual revenue if it monetizes justs its billion-user Maps product.

Price Action

Facebook was up 0.49 percent at the time of publication, while Alphabet shares were rising 1.43 percent. 

Related Links:

Tinder Or Facebook: Analysts Weigh In On Who's More Attractive

Alphabet Isn't Facebook, Stifel Says In Upgrade

Latest Ratings for FB

DateFirmActionFromTo
Nov 2018ArgusMaintainsBuyBuy
Oct 2018Morgan StanleyMaintainsOverweightOverweight
Oct 2018Raymond JamesMaintainsOutperformOutperform

View More Analyst Ratings for FB
View the Latest Analyst Ratings

Posted-In: Brian Nowak Morgan StanleyAnalyst Color Price Target Reiteration Analyst Ratings Tech Best of Benzinga

 

Related Articles (GOOG + FB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

As Oil Fuels Equities Rally, Markets Eyeing Key Technical Levels

Mid-Morning Market Update: Markets Open Higher; Magna Tops Q1 Views