Google's AI Proves It's Boosting, Not Disrupting, Legacy Ad Monetization: Analyst

Goldman Sachs analyst Eric Sheridan maintained a Buy rating on Alphabet Inc GOOG GOOGL with a price forecast of $220 on Thursday.

Sheridan said that expanding upon its recent AI announcements, Google’s Marketing Live keynote outlined Alphabet’s vision for launching AI tools and services in the context of digital advertising.

The analyst noted that Google continues to repeat how AI can help increase ad spending performance across its suite of products.

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With respect to Search, Google continues to showcase how search is evolving with AI and provided disclosures around increasing usage, engagement and monetization of these AI features, the analyst noted.

Further, Google’s new AI Max for Search Campaigns highlights how AI can enhance advertisers’ reach and conversions in existing search campaigns.

Per the analyst, this progress is a continued positive proof point against heightened investor concerns that AI may disrupt the monetization potential of its legacy formats and platforms over the long term.

For rich media formats, this keynote and Google’s recent Brandcast Upfront event showcased how Google plans to leverage its scale and position to capitalize on evolving consumer habits and the rise of creator content to introduce new solutions for advertisers.

Specifically, Sheridan noted Google’s recent announcements around new ad formats, generative AI for ad creative, unique content, and a unique scale of users, highlighting how the company is increasingly well-positioned to capitalize on evolving streaming and digital video trends over the long term.

As outlined in Sheridan’s recently updated 10 Internet Themes for 2025, digital advertising is one of the few subsectors within his coverage where AI is seeing early adoption and monetization.

Against this backdrop, the analyst noted Alphabet is well positioned to capitalize on the theme of AI longer-term, given its leading AI capabilities, infrastructure advantage, and benefits of scale concerning both users and advertisers to deploy new AI tools & services over the medium term. He remained constructive on the mix of Alphabet’s businesses and their operating profile in the coming years.

Sheridan projected fiscal 2025 revenue of $325.8 billion and EPS of $9.21.

Price Action: GOOGL stock is trading higher by 2.85% to $173.36 at last check Thursday.

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